Seasonality affects stocks. It’s a fact that a number of pundits have tried to answer the ‘why?’ and the ‘how?’ of it. But first, lets look at the numbers in this handy chart:
Now carefully look at December and January. Its almost a guaranty that the market melts up in December and goes down in January.
If you are in the market, enjoy the rally till Christmas and get out! If you are not getting paid to be a hero, then why try to be a superman?
In fact, it looks like you can stay out of the market till April, or maybe comeback only in July? Something to think about…
As to the “why” and the “how”? Well, the US markets enjoy a Santa Claus rally (most of the time) and it does have affect other markets. Also, portfolio managers looking to do some window dressing might be tempted to play high-beta emerging market stocks, so India might be benefiting from that. But who cares? With the global market teetering on the European experiment gone bad, why take changes? Book profits instead!
