2023 Santa Rally

Before I knew it, I was already in December, so I wanted to write an article about the December market. First of all, I think investors in the market have heard of “Santa Claus rally” or “decorate the facade” or “decorate the facade” in Chinese. Over the years, Wall Street investors have said that the market trend in December is generally not bad, and there is even a sharp upward trend. The return rate is impressive, and investors and market sentiment will slowly become optimistic in December.

So why would the market think so? I think there are two ways to say it. First, the end of the year is usually Wall Street and fund manager settlement month. This is a summary and settlement of fund performance for one year. Wall Street and fund managers' year-end awards are often highly linked to fund performance, so there is a saying that Wall Street and fund managers will work together to build momentum. In order to make the overall performance unsightly, Fuhong will land.

Second, I think the driving force behind the year-end window whitewash market is that the market itself realizes this market. Imagine if there was such a statement in the first place, and no one may believe it, but due to the high frequency of occurrence, more and more people believe this statement over time, so the market will fulfill this expectation on its own, so over the years, I have actually observed that the so-called “Santa Claus Rally” or window painting market seems to have shown signs of starting early. The reason is that when most people have this kind of expectation, the layout will be arranged relatively early. As a result, you'll be early, and so will I. Everyone will evolve early together to become a person who appears early on the market.

The data in the chart above are statistics from 1928 to 2021. This data shows the worst month for the S&P 500 in so many years. As a result, since December has been so many years, only 2018/12 had the worst performance of the year. This means that from a statistical point of view, December is at least 100 years old, and it is rarely the worst performing month of the year. Of course, history does not represent the future; this is also viewed from a statistical point of view.

But this year, we still have a third factor that could lead to another chance at the end of the year. In other words, US stocks seem to be catching up with the last wave of stock buybacks, because stock buybacks will be taxed once the inflation reduction bill is implemented next year. As a result, the current rise in the US stock market is likely to continue in December. According to another chart below, the statistics show the trend from 1950 to December 2021. On average, we can see that the window painting market for the second half of December generally doesn't start until the end of December, with an average monthly increase of about 1.5%.

Will history repeat itself this December? Of course, I'm afraid to write a package. I'll leave this up to the audience to evaluate and decide. I want to take advantage of the opportunity while not forgetting risk control. By the way, I have to remind you, please go back and take a look at the first photo. From January to March of the following year after the window painting market ends, there is generally a good chance for a rebound. The market will begin to improve, and this will tend to be the worst month of the year. Investors should be cautious afterwards, because this may also be a market I've known since it was a market I've known. Encourage them together~