Wizzard investing: Rocking around the Christmas tree

In 1973, Wizzard proclaimed they wished it could be Christmas every day, however when it comes to investing during the festive period, does the Santa Claus Rally echo their sentiments?    

For those that don’t know, the Santa Claus Rally was a 1972 theory by Yale Hirsch, who linked the final few weeks of the year with a notable increase in stock prices. It was believed that due to the increased holiday spending, reduced activity in trading during the festive period, and people getting a Christmas bonus, stock markets benefited from an uptick late in the year. 

Whilst we do not support making any kind of investment decisions based on a time frame as short as the Christmas period, nonetheless we thought it would be fascinating to see if our figures support the urban legend or provide Scrooge-like returns. 

As the supposed benefits are linked to equity markets, we’ve used our two portfolios with the highest level of exposure to this asset class; Adventurous and Global Equity. We’ve based it on a two-month period from the start of November to the end of December. 

As a barometer to compare year-round performance, over the past 15 years of rolling two calendar month performance, the Adventurous portfolio has produced a positive return 76% of the time, with the Global Equity portfolio not far behind with 73%.(1)  

The results are in! 

Wondering if our portfolios have caught the magic of the Santa Rally over the past 15 years? Here’s the festive headline: from the start of November to the end of December, our portfolios delivered positive returns in 14 out of those 15 years! That’s a sparkling 93% success rate, and well above the typical two-month performance you might expect throughout the rest of the year. 

Don’t get too excited    

Of course, it wouldn’t be a proper investment update without the classic disclaimer: “Past performance is no guarantee of future results.” And let’s be honest – there are always reasons to be cautious. Take 2018, for example: the only year our festive run faltered. That was when Donald Trump was in the White House, and markets took a hit from the US-China trade war. Sound familiar?  

With Trump back in the headlines, sometimes all it takes is a single post on X to send markets tumbling faster than Father Christmas down a chimney! Also don’t forget, the later-than-usual timing of the autumn Budget landing in late November could also shake things up. 

However, whether your portfolio is up or down over the festive period, rest assured all our decisions will be made with your best interests at heart to give long-term financial confidence. At Equilibrium, we stand by the mantra that investing is for life (or at least 5 years!) and not just for Christmas! 

Past performance is for illustrative purposes only and cannot be guaranteed to apply in the future. Investments will fall as well as rise.  

This blog is intended as an information piece and does not constitute a solicitation of investment advice.  

If you have any further questions, please don’t hesitate to get in touch with us on 0161 383 3335 or by reaching out to your usual Equilibrium contact. 

Sources 

(1) www.feanalytics.com