The Fed aside, investors have reason to feel
good about January's returns. Stocks tend to continue their momentum when the
opening month is strong.
According to our colleagues at Dow Jones
Market Data, when the S&P 500 finishes January in positive territory, the
February to December period posts gains 78% of the time, with an average gain
of 9.1%. That compares with an all-time average gain of 6.5% for the February
to December period.
But there's a fairly significant caveat, which
I mentioned last week. The last time the Nasdaq saw these kinds of January
gains was in 2001, in the middle of the dot-com crash. In January 2001, you
probably felt good about the Nasdaq's 12.2% gain. But it didn't last. The
tech-heavy index still finished the year down 21% before falling another 32% in
2002.
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