Today the world’s 2 billion+ Christians pause to celebrate the birth of a nice little Jewish boy who was born to a virgin mother who, together with her husband, had travelled all the way to Bethlehem just so they could pay their taxes to the Romans.
Apparently tax-paying was so popular then, that all the available accommodation in Bethlehem had been taken and the family was only able to shelter in a stable in what is now Manger Square. Today the Square is flanked by the Church of the Nativity on one side and the Mosque of Omar on the other and Bethlehem is in a zone controlled by the Palestinian Authority.
When Jews, Christians and Muslims conspire to cook up a story, it’s certain to be complicated!
But there’s also a fanciful, secular side of the Christmas story that’s celebrated by millions of non-Christians. Children all over the world look forward to the arrival of a gift-giving Santa Claus who spends all year at the North Pole with his army of toy-making elves apparently drinking a never-ending supply of Coca-Cola. Then on Christmas Eve, he hitches up his flying sleigh to a team of eight reindeer who have been led since 1939 by a young buck with a very red nose that can guide them all through the worst of foggy weather.
We here at The Investment Reporter like to tell stories too. And, appropriately, some of them are of the fanciful variety and with a Christmas theme.
The first of these is titled the Santa Claus Rally in which Santa brings all the good little investor boys and girls a special gift in the form of a price jump in stocks. Actually, the rise in prices refers to the whole month of December but is generally focused on the last week of the year. If there is any good reason for this rally it is probably driven by trading needs related to accounting and tax reasons which must be completed by the end of the year or by fund managers who may be window-dressing their performance before year-end or just because people are buying up stock in anticipation of the . . . .
January Effect. This is a stock market event that takes place when many year-end tax-loss sellers jump into the market in the early New Year to buy back the stocks they sold before year-end. They are joined by other investors looking for bargain prices that were caused by particularly heavy year-end selling. The effect of all this buying is said to drive the prices of stocks back up in January. There is also speculation that the payment of big year-end bonuses causes a flood of cash to enter the stock market in early January.
Perhaps the most fanciful Christmas investing story is the Boston Snow Indicator. This market theory holds that a white Christmas in Boston will cause stock prices to climb. Since there is, of course, no logical correlation between Boston snowfalls and stock market performance, this indicator’s success would be just an amazing coincidence. Perhaps that’s why it’s best known as the BS Indicator. (Or, as the more statistically- and scientifically-inclined may put it: “Correlation does not imply causation”.)
We also like to tell useful stories here at The Investment Reporter. In fact, we’ve written a book full of them. It’s called The Little Book of Investment Knowledge and it’s free for the asking. Ever since 1941 our Investment Planning Committee has met continuously, but, obviously, with an ever-changing cast of characters. In our book these characters meet to discuss the principles of successful investing in a story-telling environment.
So even though it’s Christmas Day today, it’s still not too late to add that one last gift book to your list. Give it to yourself if you want to find a quiet moment of reading today. Or give it to someone who might appreciate some good investing stories, many of them told in a fireside setting quite appropriate for a good Christmas Day read.
Go to our home page at AdviceForInvestors.com and follow the link in the box at the upper right-hand corner. It’s our gift to you. Merry Christmas and happy reading!
(We realize many of us are not celebrating Christmas as a religious holiday today. But any holiday that promotes peace on earth and good will towards men is worth honoring. Or, at the very least, let’s all rejoice in the passing of the winter solstice here in the northern hemisphere. That and Saturnalia are probably why we chose December 25 in the first place.)
The Investment Reporter, MPL Communications Inc.
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