This January Effect is visible throughout the world stock markets and can be understood in the following context.
- The January Effect is the perceived seasonal tendency for stocks to rise in that month.
- From 1928 through 2018, the S&P 500 rose 62% of the time in January (56 times out of 91).
- The January Effect is theorized to occur when investors sell winners to incur year-end capital gains taxes in December and use those funds to speculate on weaker performers.
- Like other market anomalies and calendar effects, the January Effect is considered by some to be evidence against the efficient markets hypothesis