Ever wonder why the market feels a little different this time of year? It’s often called the “January Effect.” Here’s the breakdown: This market theory suggests that stock prices—specifically small-cap stocks—tend to rise in the first month of the year.
Why does it happen?
- Tax-Loss Harvesting: Investors sell “losers” in December to offset capital gains, then buy back in January.
- Fresh Capital: New year, new investment budgets, and year-end bonuses hitting the market.
- Psychology: The “Fresh Start” mentality often leads to increased buying activity.
What are you seeing in your portfolio so far? Are we heading for a green month? 👇
