NEWS, VIEWS & TRUTHS (19TH NOV – 23RD NOV)

Congratulations!  You have made it through another week, especially as the easterly wind blows in and already, social media is throwing around the #snowvember hashtag.  So reward yourself with a cuppa, perhaps even a Hobnob or two and enjoy this week’s News, Views and Truths.

The market is a very special thing.  It is the collective desire of millions of individual participants and results in the absolute truth.  However, as humans are susceptible to superstitions, naturally the market is also.  Let me tell you about the tale of the Santa rally…

The Santa rally is the anticipation that the market will generate a positive return during the month of December.  Now, superstitions usually result in mocking jibes by seasoned market veterans, however, this one is statistically visible. In the past 30 years, the FTSE 100 has ended December higher 26 times.  It also occurs in the US, with similar statistics offered by the S&P 500 index.

The question is why?  First of all, it’s not Santa Claus himself throwing a few cheeky call options about; he is frankly far too busy making his list, checking it twice with the ultimate aim of finding out who is naughty or nice.  You know who you are…

However, the reasons are unknown, although one can make certain guesses.  First of all, it could simply be end of year bonuses, optimism and Christmas cheer.  Others are more pragmatic with the suggestion that asset managers may be shifting money from cash into equities ahead of end of year client reporting.

The bottom line is that no one knows, but it is a thing.  And the reverse is too.  A failure to stick to the seasonal script can be an indicator further short-term pain is in store, hence the expression, “If Santa Claus should fail to call, bears may come to Broad and Wall.”

However, as I began, more often that not, Santa does not forget investors.

Today’s playlist comes from our newest member of staff, Emma Marshall who has joined Three Counties to help develop our growing client services team.  You will be able to meet Emma and everyone else at our Christmas Open Day, held at our Lambton Park offices on the afternoon of 14th December.  Invites are currently going out, however if you do wish to pop in for some festive cheers, please drop an email to Wilma.watson@three-counties.co.uk.  We look forward to seeing you then and have a great weekend!


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