The January Effect

One of the most oft referenced Wall Street adages is that one that states," as goes January so goes the year", or another version being the January Effect.  Either way tradition holds that the movement of stock prices in either direction predicts the year.  So far the market is off to a good start.  The economy is improving, although unemployment still is too high.  Stock prices have been ignoring the bad news that lurks ahead.  Right now bad news is discounted which in my view is a mistake.  Longer term the US economy will no longer dominate the global financial structure.  Increasingly that role with be played by China.  Simply:  We will be second-fiddle.  How that plays out in the geo-political world is hard to figure but I do know it is fraught with risk for investors. 

As an aside I really resent the fact the stock market puts so much emphasis on January, quite arguably the most detestable month of the year.  I once had a friend who had an expression", I don't do Januarys".  It was and still is great advice.

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