Saturday, February 7, 2009

2009 January effect - did we see one?

In my last post at the beginning of January titled 2009 January effect we said that many investors believe that January is the month of high returns , particularly for the small caps.
Well, lets check it out:

The NASDAQ ETF QQQQQ moved from 29.46 to 29.06 closed basically flat throughout the month.
I was looking for something to track the small cap market and quick google searches yielded Vanguard Strategic Small-Cap Equity Fund (VSTCX). Dec 31st prices closed at 12.15 and at Jan 31st the fund was at 10.87 down slightly less than 10%.

The S&P 500 went from 902 to 825 down almost 10%.

Essentially looks like all the markets were down in Jan. Is that because we had a stellar December? Did people not have money to reinvest in January?

Looks like investors, still unsure about the economy stopped from putting long orders in January. Lets hope the future months will see a rebound into the positive territory.


Tom Hanna said...

January started out strong, which is pretty much the classic January effect. I think actually the most documented effect is small caps outperforming the broader market in the first half of the month and I'm not sure if that happened or not, but the broader market was up the first week.

The bigger issue is that 10% loss in the S&P for the month - 32 out of the last 39 years the S&P trend for January was the trend for the whole year so big gains for the year look less likely. Of course, last year was such a bad year that this year could be one of the exceptions.

Tapan said...

Good points Tom. Lets hope that 2009 does not reflect an extended Jan. 2005 or 2006 had similar Januaries but turned out to be profitable years.