Is Santa (Rally) Real?

Written by Andy Pratt on .

You may have heard of a long documented market phenomenon, aptly called the Santa Claus Rally, referring to the markets history of outsized returns during the last five days of the year and the first two days of the New Year. During this time frame, the market rises 77% of the time with an average return of 1.7%.

No one really knows why this pattern exists; though some attribute it to year-end portfolio tax related adjustments, vacations and plain old holiday optimism. The amazing thing is, despite being known for decades, the rally continues to persist.

It seems in good and bad years alike, the year ends with a bang.

Our Favorite Links in the Wake of the Rate Hike

Written by Andy Pratt on .

In what is a good sign for the overall economy, the Federal Reserve announced today it would hike interest rates from the current near 0 level to 0.25%.  The widely expected move is sigificant because it marks the first time the FOMC will raise rates off of 0 since its unprecendented move to lower rates to stimulate the economy in December of 2008.

This is an historic decision and one market watchers have been anticipating for years.  As a result, coverage of the announcement has come in from all angles.  Below are a few of our favorite articles:

Stocks Perform Well Following Rate Hikes

Written by Alex Shen, CFA and Edited by Andy Pratt on .

When the Federal Reserve hikes interest rates for the first time this recovery – and all signs point to a December liftoff – it will mark the end of the Fed’s easing policy but not the start of tightening. Tightening has been in motion since the Fed ceased its Quantitative Easing program in 2014. Still, many investors fear the Fed will be raising rates too soon despite the fact the stock market historically rallies following interest rate hikes.

Stocks Following Rate Hikes

Is the Stock Market Overvalued?

Written by Alex Shen, CFA and Edited by Andy Pratt on .

The valuation of the stock market has been a trendy topic for financial blogs and newspapers as market watchers question whether the stock market is overvalued.  There are essentially two schools of thought:  On one hand, Robert Shiller, the Nobel-Laureate economist who correctly predicted the 2001 and 2008 recessions in his book Irrational Exuberance, has been calling the stock market overvalued for years, most recently doubling down in the aftermath of August’s correction.  On the other hand, Jeremy Siegel, the acclaimed “Wizard of Wharton” for his track record forecasting the stock market’s ups and downs, has repeatedly made the case that, considering today’s low interest rates, the stock market is fairly valued.

These 6 Charts Show Why the U.S. is Not Heading for a Recession

Written by Andy Pratt, Charts & Research by Alex Shen, CFA on .

Corrections are completely ordinary, healthy market events, yet there seemed to be an outsized negative reaction from investors during the third quarter correction.  Surely, the fact that it had been nearly six years between corrections was a major factor and investors who could not stomach the volatility implicit in equities were chased back to the sidelines.  Still, some market timers see this as an opportunity to go to cash, predicting a bear market on the horizon.  Bear markets don’t pop up out of thin air, though, so we looked for evidence of a recession on the horizon. 

These 6 charts show why the U.S. is not heading for a recession.