January Effect
The end of last week in December and often December 31, is the time when many investors are selling their stocks in order to claim capital losses, which is done for tax purposes. During the first week in January, the same investors will reinvest their money in the market, which causes security prices to rise.
This behavior is known as January Effect.
The market is usually well prepared for the January Effect, so it is very difficult to profit from this phenomena.
| Related Terms: |