In the investment world there is a very popular anomaly, the January Effect. The January effect suggests that if the markets finish January in the red than the whole year will end in red, if January finishes positive then the whole year will be positive. This has been correct 32 out of 39 times since 1969.
If you are a believer in the “January Effect” than 2009 might not be a good year, the S&P 500 finished January 8.6% down and TSX was down 4%. According to the January effect 2009 will end up negative as well.
However it has only been accurate 82% which means 18% chance that it is wrong, last time the January effect was wrong was in 2003 when January ended in Red and the year ended up very strong. Can this be one of those years where it is wrong? Although it does not seem that way many investors are hoping it will be.
Do you believe in the January effect?
Here is the weekly review of personal finance blogs for week of March 2nd:
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Million Dollar Journey discusses Portfolio Allocation- RRSP’s, TFSA’s and Taxable Accounts
Canadian Capitalist Looks at Results of Dollar Cost Averaging for TSX
The Financial Blogger discusses Investor Profile
Tax Guy writes about Pitfalls of Transferring Ownership To Avoid Probate
The Dividend Guy looks at Future Stock Market Returns
The Canadian Finance Blog gives 10 Money Saving Tips
Carnivals
Money Hacks Carnival This week was hosted by The Penny Daily and our “Is Buy and Hold investment strategy dead?” was elected as editor’s pick
Carnival Of Personal Finance was hosted by Free Money Finance
We Hosted Festival of Stocks
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Article by Ray
Ray is an ex-financial adviser and the founder of Financial Highway. Currently working in the financial industry and working towards completing his Chartered Financial Analyst, CFA, designation.
Ray has written 271 articles.
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Thanks for the link!
Found your blog on RFD. Would be nice to exchange blogroll links with a local blogger. Let me know if you are interested =)
I’m also interested in psychology and human behaviour. Very interesting subject, but also very useful in every day life.
IB
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