ShmoopTube

00:00

Finance allah shmoop what are the santa claus rally and

00:05

the january effect Well we actually attended a santa claus

00:10

rally last december the energy in the arena was off

00:13

the charts Who knew elves could be that loud Yeah

00:17

really Ok so in finance land a santa claus rally

00:21

is well something else it refers to a rally or

00:25

rise in stock prices during the month of december and

00:28

they don't even need magical reindeer Teo you know achieve

00:32

lift off Why december Because according to you our desk

00:35

calendar december is the last month of the year on

00:39

for a whole bunch of tax and accounting reasons there

00:42

are trades that need to happen before the end of

00:45

the calendar year like professional funds need to have a

00:48

certain minimum amount invested in the stock market rather than

00:52

holding cash or there was some huge hot stock that

00:55

they want to show that they at least own for

00:58

pa art of the year so they buy it in

01:00

december and all investors want to sell their losers either

01:04

for the tax loss or just because they don't want

01:06

those on their annual report that they owned a million

01:09

Shares of dog crap dot com so because everything is

01:12

better with acute see name attached well this onslaught of

01:16

activity has been termed the santa claus rally and generally

01:20

there is more buying than selling as optimism generally beats

01:24

pessimism this time of year So historically stocks have gone

01:28

up right around christmas All right so what about the

01:30

january effect Well because all the buying has bought up

01:34

the quote loose unquote shares in the market place or

01:38

rather the nervous nellies who kind of sort of wanted

01:41

to sell their shares have now sold them While there

01:43

simply isn't the supply of shares at lower prices available

01:47

for buyers to buy and so with the same demand

01:49

unless supply prices go up yeah eq on one first

01:53

week and to boot Yeah there's typically an increase in

01:56

stock prices after new year's which financial gurus have lovingly

02:01

named the january effect Or as mrs claus calls at 00:02:05.17 --> [endTime] santa's recovery period No

Full Transcript