The stock market's dismal performance in January is a foreboding sign for followers of the Wall Street aphorism, "As goes January, so goes...
The stock market’s dismal performance in January is a foreboding sign for followers of the Wall Street aphorism, “As goes January, so goes the year.”
But hope is not lost. Sticking with January’s winners has been a smart strategy in the past, says Sam Stovall, chief investment strategist of Standard & Poor’s.
According to S&P, the stock market’s top-10 industries in January have outperformed the broad market nearly three-quarters of the time over the following 12 months.
In all, these January winners have returned 15.4 percent a year, on average, compared with 7.4 percent for the S&P 500 index.
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While this pattern may not hold in the future, Stovall believes the trend is more than a fluke.
Investors “look at January as a new beginning,” he says. “If they’ve got money on the sidelines because they’ve sold out some dogs in December, now they’re thinking, where do I want to put my money?”
More often than not, he says, they choose the best performers. The demand, in turn, boosts the price of the stocks.