SANTA CLAUS Rally in 2023 for JSE ALSI 40?Will we have a Santa Claus rally this year?
Statistics say, it is likely but let's start from the beginning...
The Santa Claus rally is when stock prices, both locally and globally, tend to go up and end the year on a positive note.
Now, why does this happen? Here are some ideas:
Holiday Cheer:
During the holiday season, people generally feel more optimistic and positive.
The festive mood can rub off on investors, making them look at the market with a brighter outlook.
Positivity often leads to more buying, which helps the rally.
Tax Time:
Toward the end of the year, investors and fund managers review their portfolios for tax purposes. This is when you'll see them selling stocks to get some tax benefits.
Once they sell, they use the money to buy other stocks, thinking those will do well in the coming year.
This buying spree lifts stock prices and pushes up market indices.
Bonus Spending:
Investors often use their year-end bonuses to buy stocks. More buying means higher demand, and you know what that does – stocks go up!
While it's a bit speculative, nothing says Santa Claus Rally like charts showing off holiday cheer.
The JSE has seen gains in 14 out of 20 Decembers!
Take a look at the JSE-ALSI stock market chart since 2003. Each December is marked with a vertical blue line, showing how it performed:
That's a 70% win rate with positive gains in 14 out of 20 Decembers, accumulating a total of 38.72% gains.
So, chances are, buying this Christmas might be a good idea, especially after a sideways year for the JSE ALSI.
