Is Santa Claus going to visit Wall street this year or not? You’re supposed to get something from Santa if you’ve been good all year, but is that going to apply here? Ironically, because stocks have been so good lately they might not get the Santa rally after all.
There’s people guessing both ways here, and you never really know in the stock market. You have one side that’s telling you that we’ve just gone up way too fast way too quickly recently with the Trump rally so there’s no more room for Santa. However, you’ll also get others that tell you that this run up still has some steam and it would be wise to stay with the trend.
What is the Santa rally anyway?
If you were wondering what the heck it was, it’s basically just the common rise in stocks near the end of the year. It has happened many times before, and it will happen many time again. The exact time frame is debatable, but it’s basically the time between Christmas and new years. On average stocks have done great in that time frame going up a majority of the time.
Some people are saying that we’ve already seen the Santa rally though, and we can’t expect the market to keep going higher so quickly. That’s a valid argument. It has gone up real fast real quick, but that definitely doesn’t mean that it’s done.
The good news is that sentiment is bullish right now. There seems to be more confidence in the economy ever since the world found out that the next US president will be Donald Trump. So it seems that whatever you think will happen near the end of the year the market is likely to continue going up in January. If you’re on the sidelines waiting to get in then it’s probably best that you get in on a dip if you can or otherwise just hold steady for now.
December good for stocks
Historically December has been great for the stock market. It’s actually one of the best if not the best month for stocks when looking at past performance. The reason behind that could be a multitude of things including some of the same things we are seeing today like the new president coming in or the economy improving. Other psychological things are at play too though as you can expect people to be more giving and happier around the holidays. This could in turn mean investing more money because you feel confident and happy in doing so.
Whatever the reasons are behind the Santa rally there is no denying that it exists (or at least we perceive it to exist). If I had to guess I would say that stocks are going to be higher come January so you’d be wise to hold onto what you have or to go ahead and dollar cost average into some more stocks. I wouldn’t make any large bets at this time though. Let’s hope Santa comes and visits everyone. He’s supposed to isn’t he?