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What January effect?

Posted By Barry Ritholtz On December 24, 2004 @ 8:41 am In Markets | Comments Disabled

From Chart of the Day [1], comes this explanation of the so-called January effect.

A common topic this time of year is the January effect. Many long-term studies have confirmed that small stocks have consistently outperformed their large stock counterparts in January. However, today’s Chart of the Day demonstrates that the January effect may be due for a name change, as small-caps have not been keeping pace over the past decade. What happened? One likely possibility is that the very popularity of this anomaly has changed investor behavior. So if recent trends continue, be prepared for the December / February effect.

Here’s their chart:

January_effect [2]

- The Russell 2000 index was used to measure small-cap stocks.
- The S&P 500 was used to measure large-cap stocks.


Chart of the Day [1]

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2004/12/what-january-effect/

URLs in this post:

[1] Chart of the Day: http://www.chartoftheday.com/

[2] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/january_effect.jpg

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