All other things being equal, should you buy stocks in December and sell them in January?
.
There is a large literature using financial market data on the causes of a “January effect,” which produces higher stock prices in January than in other months of the year. We present the first experimental study of this phenomenon in the context of two well-known auction experiments. After controlling for variables that could influence subject bids, such as differences in private values, cumulative earnings, and learning effects, the prices in the January markets were systematically higher than those in December, a difference that is economically large and statistically significant. The results provide support for the conjecture that psychological factors may contribute to the well-documented January effect in empirical stock market data.
Source: “Yes, Wall Street, There Is A January Effect! Evidence from Laboratory Auctions” from Journal of Behavioral Finance, Volume 8, Issue 1 April 2007 , pages 1 – 8
Follow me on Twitter here or get updates via email here.
Can you get rich by insider trading — legally?
Do good Super Bowl commercials mean higher stock market returns?
Can you tell how successful a female CEO’s company is by looking at her face?
