The Santa Rally is coming…

Whether or not you believe in Father Christmas could be down to the evidence, or lack thereof, of the existence a jolly man dressed in red delivering presents at Christmas.

If seeing – and evidence – is believing, then market research over the past 30 years shows there is little doubting the reality of the surge in shares in the run up to Christmas that has the same name as our magical, North Pole-dwelling friend.

That’s right, the Santa Rally is real, and it is coming, delivering benefits to shareholders and investors all over the world.

According to Simon Shorthouse, Associate Director at Robertson Baxter: “All the evidence points to another Santa Rally for markets again this year. Statistics show that world stock markets are more likely to rise in December than any other month.

“Since 1987, gains made in December average 2.2%, which makes is the month of largest gains. This is in contrast to August, which is traditionally the worst month, falling 1% on average.

The Santa Rally theory is backed up by analysis conducted by Schroders covering the world’s largest stock markets. Their research indicates that markets have in the past risen more frequently in December -  79.2% of the time in fact. April was second best at 74.2%.

Their research shows that December was also the strongest month for gains, with 2.2% on average. April was second with 1.9%.

“Each year there speculation as to why stock markets rise at this time of year,” added Simon.

“One theory is investor psychology – more good will cheer puts investors in a positive mood. Another view, is that fund managers are rebalancing portfolios ahead of the year end.

“It’s an old adage that stock market superstitions are true… until they fail to be. Just because it’s happened before doesn’t mean that it will again,” he added.

“So those looking to gamble on and believe in Santa again at this time of year do so at their own risk. Investing should be for the long term not just for Christmas.”


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