What Is January Effect? Is It Real?

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[{"selector":"#anim-f2bd5b19-d126-410c-9521-e2a8e173c68f","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-407ce397-7bb1-452c-8d18-b78797cca624","keyframes":{"transform":["translate3d(0px, -81.09904%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Floral The January Effect is a phenomenon in which stocks supposedly perform well during the first month of the year. Learn more

Believers of the January Effect say it typically occurs in the first week of trading after the New Year and can last for a few weeks.

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Investors can either buy stocks in December that are expected to benefit from the January Effect or buy stocks in January when prices are expected to be higher due to the effect. Learn more

Some analysts note that the effect has become less pronounced in recent years due to the rise of tax-advantaged investing accounts.

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Many investors claim that the January Effect is not real because it is at odds with the efficient markets hypothesis. Learn more

Efficient market backers say that external factors — like the January Effect or any non-disciplined investment strategy — aren’t effective in portfolio management.

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The best strategy, according to efficient market backers, is to buy stocks based on the stock’s underlying value — and not based upon dates in the yearly calendar. Learn more

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What Is January Effect? Is It Real?

Believers of the January Effect say it typically occurs in the first week of trading after the New Year and can last for a few weeks.

Some analysts note that the effect has become less pronounced in recent years due to the rise of tax-advantaged investing accounts.

Efficient market backers say that external factors — like the January Effect or any non-disciplined investment strategy — aren’t effective in portfolio management.

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