What Does a Positive January Mean for the Rest of the Year?

February 1, 2013

So, we had another January with a positive return. This January, the S&P 500 had a total return of 5.18%.

You have probably heard about the January Effect. Basically, it means what happens in January usually foreshadows what will happen for the year. I decided to look back at the returns I have to see if there was any truth to the saying. The findings were interesting.

Of the 87 years that I have data on (not including this year), I found that there were 55 years with a positive January.

Of those 55 years, 46 of them (roughly 84%) had positive returns over the next 11 months.

Here’s another way to look at it:

A Color-Coded Look at the S&P 500 Index

2 responses to What Does a Positive January Mean for the Rest of the Year?

  1. “Of those 55 years, 46 of them (roughly 84%) had positive returns over the next 11 months.”

    Just a clarification question: 84% had positive returns over the next 11 months not including the January gains, or does that include the gains from January too?

    If the former, that is quite amazing.

  2. No, that does not include January’s return. In other words, it’s like waiting to see how January performs and investing in February if January was positive.