When you invest, your capital is at risk.

Share

Santa Claus Rally

In a year when the markets fluctuated wildly between naughty and nice, investors could do with a Christmas present. Despite his busy schedule, it seems like Santa doesn’t usually forget the stock exchange.

2022 has undoubtedly been painful for most of our wallets. We dealt with record-breaking inflation, the fastest rate hikes in history, impending recession and a bearish stock market. While many continue to find opportunities within these conditions, there is no doubt we’d all still appreciate a Santa Claus rally.

The term “Santa Claus rally” was first coined in 1972 by Yale Hirsch, a market analyst who observed abnormal returns in the last days of the year. It’s described as a stock market rally that happens around Christmas time, encompassing the last five days of the year and the first two days of the new year. 

This rally occurred 57 times in the 70 years between 1950 and 2020. Every time, the S&P 500 went up by an average of 1.3% during those seven days alone.

Several analysts have attempted to understand the causes for the year-end rally, but no conclusive evidence points to a specific reason. Hypotheses include the market’s optimism for the new year, short sellers and pessimistic investors taking a break during the holidays, and end-of-year bonuses and gifts providing investors with more capital. Some even say that, due to the increasing popularity of the phenomenon, it has become a self-fulfilling prophecy: people invest believing that it will happen.

Whatever the real cause is, investors this year could certainly do with a festive spike. Last year’s Santa Claus rally pushed the S&P 500 up by 1.4%. Let’s make a wish that Santa continues his generosity in 2022.


Don’t have Stake?

Start ahead of the game. Get a free stock in one of Nike, Dropbox, GoPro or a mystery stock when you sign up and fund your account within 24 hours.

When you invest, your capital is at risk.

Related


Stake logo
App Store logoGoogle Play logo


Stake is the trading name of Hellostake Limited, a company registered in England and Wales (Company no. 11676409). Hellostake Limited is authorised and regulated by the UK Financial Conduct Authority under the Firm Reference Number 830771. Registered address: 85 Great Portland Street, London, W1W 7LT, United Kingdom.

When you invest, your capital is at risk.

The value of your investments can go down as well as up and you may receive back less than your original investment. Any advice is of a general nature only. As investments carry risk, before making any investment decision, please consider if it’s right for you and seek appropriate independent taxation and legal advice. The information on our website or our mobile application is not intended to be an inducement, offer or solicitation to anyone in any jurisdiction in which Stake is not regulated or able to market its services.

At Stake, we’re focused on giving you a better investing experience but we don’t take into account your personal objectives, circumstances or financial needs. Please view ourTerms & Conditions,Privacy PolicyandDisclaimers before deciding to use or invest on Stake. By using the Stake website or service in any way, you agree to our Privacy Policy and Terms & Conditions. All financial products involve risk and you should ensure you understand the risks involved as certain financial products may not be suitable to everyone. Past performance of any product described on this website is not a reliable indication of future performance

Copyright © 2023 Stake. All rights reserved.