Monday, December 10, 2007

Thanksgiving for Bears, Christmas for Bulls


Here is an old Wall Street saying that while the bears have Thanksgiving, the bulls have Christmas. Since both November and December have recorded above-average monthly returns and below-average frequencies of monthly declines since 1945, one has to conclude that this saying relates to the days just prior to each holiday, not the entire month. I think it is fairly easy to figure out why optimism grows during the final month of the year: The current year is nearly behind us and the focus has shifted to the year ahead, complete with optimistic earnings growth projections and price appreciation projections.




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