Is Santa Claus coming to Wall Street this year?
December tends to be a cheerful month for stock prices, which has some investors keeping an eye out for a late-year visit from Santa. As you can see from the chart, since 1950, December has had the highest number of positive months.
Wall Street legend Yale Hirsch, founder of the Stock Trader’s Almanac, is largely credited with coining the phrase “Santa Claus Rally.”
His work focused on the final five trading days of the year and the first two trading days of the following year. His research showed that the Santa Claus rally has occurred 58 times (80 percent) between 1950 and 2022, with an average gain of 1.4 percent in the Standard & Poor’s 500.
First, let me be quick to say past performance is no guarantee of future results. And second, long-term investment decisions should not be based on seasonal factors or short-term trends. So, while the Santa Claus rally is fun to revisit at this time of year, it’s just one of many Wall Street sayings that you might hear from time to time. Much like “sell in May and go away”—which proved to be questionable wisdom in 2024!
So enjoy the holiday season. Maybe Santa will pay us all a visit this year. Maybe not. I’ll keep you posted.
Sources:
Investopedia.com, December 15, 2023. “ Santa Claus Rally: What It Is and Means for Investors.”
Pro.TheStreet.com, December 3, 2024. “Is Santa Claus Coming to Wall Street?
The S&P 500 Composite Index is an unmanaged index that is considered representative of the overall U.S. stock market. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.