Santa-Claus-rally

You better watch out
You better not cry
Better not pout
I’m telling you why
Santa Claus is coming to town

He’s making a list
And checking it twice;
He’s gonna find out
Who’s naughty or nice
Santa Claus is coming to town

–  Santa Claus is Coming to Town, Haven Gillespie and J. Fred Coots.

Disclaimer: We should note this is not the old, plump, white-haired man who slips down the chimney to deliver presents to nice boys and girls that we are referring to here; this is Santa of the Santa Claus rally.

What is a Santa Claus Rally?

A Santa Claus rally is the surge in stock prices in the trading days between Christmas and New Year’s.

Why Does a Santa Claus Rally Happen?

There are a number of reasons why the markets have finished December positive 77% of the time for the past 120 years, with the Dow producing an average gain of 1.07% (according to the 2016 Stock Trader’s Almanac). While it is difficult to point to one reason why the Santa Claus rally tends to happen, more often than not, the stars align and Santa Claus delivers on Wall Street. This could be because:

  • Traders are enjoying some well-deserved time off the last week of the year
  • The jolly mood of investors putting year-end bonuses to work
  • The hope for better times in the new year
  • Less bad business-related news than usual

Will Santa Remember Wall Street This Year?

Some are saying Santa came early this year. The market looks to be in the holiday spirit as the S&P 500 is up more than 4% so far in the 4th quarter. The Dow is within reach of 20,000 and has set several new all-time highs since November. So will sugar plum dreams of lower taxes, infrastructure spending, and increasing economic growth bring investors the Santa Claus rally they are hoping for?

Here at GGM, we see signs pointing towards a positive year-end, but only time will tell what Santa Claus has in store. Regardless of whether or not Santa Claus makes an appearance on Wall Street, we wish you a happy holiday season filled with cheer.

Please contact GGM Wealth Advisors with any questions regarding your investment portfolio.

This post contains the current opinions of GGM Wealth Advisors. The material should not be considered investment advice or a recommendation of any particular security, strategy, or investment product. Information herein has been obtained by sources believed to be reliable, but not guaranteed. All investments have the potential for profit or loss and past performance does not guarantee future results.