Value Expectations submits:
We constantly read about stock market phenomena that occur that create a unique investment opportunity. One that caught our eye last year was the January Effect, and we were hoping that it would prove true as the market had already fallen off following the financial meltdown in September of 2008.
However, the January effect only materialized in part, as we witnessed nearly a 10% drop in the month of January 2009, marking the second consecutive year the January Effect has not been very effective. However, the market was up overall for the full year. The January Effect is a theory that says the stock market tends to rise the month of January as investors are buying up stocks, due to recently selling before the end of the year for tax purposes. The January Effect also notes that small cap stocks tend to outperform large cap stocks. This theory was first discovered by a Univ. of Chicago grad student Donald Keim in the 1980’s.