January's stock market history:
Bottom Line: When it comes to the stock market - January probably has more misinformation associated with it than any other month of the year. There are lots of saying and statements that don't add up (like how the first two weeks go, the month goes, etc.). Here's the truth. The "January effect" (the anticipation that poor performers from the previous year will bounce back in January really doesn't apply much this year because of the record run for stocks generally last year. Speaking of records, stocks entered 2018 with all three major indexes within 1% of all-time highs after posting gains that ranged from nearly 20%-30% last year. So, what's January likely to bring?
Since 1950 stocks have been higher 59% of the time in January. January is the sixth best month of the year historically with an average rate of return of .8% in the S&P 500. The worst year was 2009 when stocks were off by 8.5% and the best year - 1987 when stocks rose 13.2%. You can tell it's prone to a lot of volatility - though it's generally been positive. There are plenty of reasons to feel good about the start of the new year after the record ride of 2017. The biggest immediate impact comes from the tax cuts. You'll have an average of 4.1% more money to show for your work and with the best raises to start a year in over a decade...The average person is making around 7% more, net of tax cuts, compared to a year ago. We don't know how all of this will translate to stock performance but the optimism that's around is still justified.