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Ready, Set... January

Over the last 24 years, January has commonly had massive inflows of money to the stock markets through mutual funds and ETFs. On average, it saw more inflows than any other month of the year excluding November. The ' Sell in May and Go Away' approach is supported by the  chart posted by Themarketear.com . In the second half of an average year, returning to investing in September seems sensible. Outflows bottom in August, providing a good entry point for capturing increasing investment activity in November – another month of massive inflows. Why does January see fund inflows? We identify two major contributing factors: Bonuses are paid and reinvested (Wall Street recently started talking about 8 digit annual compensations) Fund managers are setting up their positions for the new year Where will the money flow in 2022?   We expect the following two sectors to benefit: Travel and Leisure . Omicron, though dangerous and fast spreading, is beginning to be compared to a bad flu by ...

Santa and the first week of 2022

“Santa paid Wall Street a visit 57 times between 1950 and 2020, according to The Stock Trader’s Almanac, delivering an average gain of 1.3% to the S&P 500 around Christmas. People generally consider the Santa market period to be the last five trading days of the year and first two of the following,” writes Bloomberg's Denitsa Tsekova. If the S&P falls over the first five days, it will be a warning that the markets should expect a turbulent year. Despite its issues, this is a guideline worth monitoring. At the same time, gains in the first week usually indicate future continuous growth during the rest of the year. 2022 is obviously going to be abnormal. It will bring an increase in interest rates, high inflation, problems with supply chains and possibly new ‘surprises’ from Covid-19.  However, most of this bad news is already priced in, while the occurrence of marginally better events among many negatives will be perceived as good news. Could 2022 under-promise and overd...