Is there really a stock market January Effect?

Articles have been flying around about the stock market’s January Effect.January Effect. People have attached this “January Effect” term to the idea that if the first few days, weeks and month of the year are good for the market then the rest of the year will be be good.

Well… I have been watching this January Effect from the shadows for a while and I have a few ideas on what it really is about… Actually what happens is the Stock Market’s volume drops in the last two weeks of December and right around that time the investors who are in the market seem to be doing tax loss selling.

And… Come January more money starts to flow into the market from year-end bonuses and new retirement fund deposits.

So what does this all mean?

If you didn’t make your moves to buy up some solid stocks in December it might have been too late. The only thing for sure in the stock market is that you can just end up with a lot of cold water even if you are careful.