Will there be a Santa rally in 2020?

8 min Read Published: 08 Dec 2020

It's been a while since I wrote about the Santa rally phenomenon. In fact I last looked at it back in 2017. But since then we've experienced some extraordinary market moves. In 2018, for example, we experienced the worst December in over 80 years. So has anything changed?

What is the Santa Rally?

The Santa rally is the name given to the end of year stock market rally. But like all the well-known investment axioms there's a lack of analysis or hard facts surrounding the phenomenon. For example assuming there is such a thing as a Santa Rally, when does it start? Traditionally the term Santa Rally describes a rally in stock prices in the month of December, or sometimes more specifically the trading days between Christmas and the second trading day of January. The reasons given for why we sometimes see a rally at this time of year range from traders closing loss-making trades for tax purposes (and then reinvesting) to simple Christmas euphoria.

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