January Effect: What It Is in the Stock Market, Possible Causes

Key Takeaways

The January effect is the supposed seasonal tendency for stocks to rise in the first month of the year.

The January effect is said to occur when investors sell losing stocks in December for tax-loss harvesting and repurchase them after the New Year.

Like other market anomalies and calendar effects where sentiment and nonrational motives appear at work, the January effect is considered by some as evidence against the efficient markets hypothesis.

https://www.investopedia.com/terms/j/januaryeffect.asp

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