Christmas always seems to be interesting for someone. For most it means snow, presents, and a fat guy in a sleigh doing some physically impossible speeds. This is the time of year that hatchets are buried, decisions for the next year are made, and presents are bought in hopes that they will bring a smile to the receiver. There are a lot of interesting things that happen around Christmas.
After Christmas, some interesting things happen as far as the Xmas market is considered. Over the last twenty years, there seems to be an uptick in the market from December 15 to January 15, which coincides with the Christmas season. Although there are other noteworthy seasons (such as the October slump), the Christmas market upswing is the only one that has been actually measured and found to be true.
For stockbrokers, this is a great selling tip; it is easier to sell stock when you know that there is going a Christmas bonus dividend, and you can tell the client. It's also great when you can explain it, so that you can see it and act on it in other times; however, he reasons for the Xmas market phenomenon are still unexplained, but there are as many theories as there are sellers.
Some believe that it is because some fund managers sell off part of their portfolio prior to December 31 and buy it back right after New Year's Day. The obvious reason is to make accounting, and therefore taxes owed, easier to deal with. However, analysts believe that hedge fund managers do a front run on the market anticipating the annual rise. Another possibility is that a number of those that receive a Christmas bonus use it to buy stock in their favorite companies, hoping to get another bonus months down the road.
There are some other interesting effects in the Xmas market. For example, the market does exceptionally well when Christmas comes on a Saturday (it shoots up 3.25%). Conversely, it does worst when the holiday comes up on a Wednesday or Thursday, in which case there are usually year-end losses; the possible reason being that the holiday being earlier in the week disrupts the standard trading week, and therefore the year-end market.
An alert person with an interest in the stock marker may also want to track the weather, as the temperature in Central Park also has an effect on Xmas market. In the seven years out of the last fifty in which the temperature went below freezing, thee market went up. There is no obvious reason here, outside of possibly the stock brokers could be staying in.
As a side note, the retail market saw a nice jump in business, which has also helped out the stock market this year as well. Although predictions were for consumers holding tight to their wallets this year, that has apparently been proven false, as this year's Xmas market sales are up.
Whatever the reasons for all of this interesting activity, during the first three weeks of December this year, the US Xmas market was ahead 3.3 per cent, Australia rose 2.1 per cent and Germany jumped 3.5 per cent. Not a bad little present from St. Nicholas.