Tis the season to stay in the stock market, because there really is a Santa Claus…a Santa Claus rally that is…
Almost every year around this time, the chubby guy in the red suit arrives with a bag full of money for investors.
But with sub-prime woes, the housing slump and plunging consumer confidence all weighing on the market, some investors worry that St. Nick will be a no-show this year.
History is on Santa’s side. Over the past 20 Decembers, Canada’s TSX has risen 19 times and fallen just once. The average gain during those months was 2.9 per cent. That’s more than four times the average monthly gain of 0.7 per cent.
In the U. S., since 1950, the Dow Jones industrial average has advanced an average of 1.7 per cent during the month. No one is exactly sure why – but the simplest explanation is that it’s driven by emotion. Around Christmas, people are cheerful, and this optimism prompts investors to buy stocks.