Is the January Effect Worth Considering?

January is nigh upon us and with it, inevitably, comes a discussion of the January Effect, which is the phenomenon of stocks tending to rise in the first month of the year.

Stocks don't always rise in January, though it seems that many times they do. No one has proven conclusively why this is, but an often-stated reason is that small-cap stocks are behind this phenomenon. The thinking is that small-caps go up in the first month of the year because individual investors have sold stocks in December for tax reasons, which pushes down prices, and then re-enter the market in January, pushing up the stocks they are buying. And they tend to trade small-caps....549 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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