When does a Santa rally start?
Interestingly, there is no agreement about when Santa rallies really start, with different sources offering conflicting answers. Does it last the whole of December, just the week before Christmas, or something in between?
At IG we decided to perform our own analysis, running the numbers over every possible combination of time periods on the FTSE and S&P from 1986-2015. And we found that the biggest rises in both indices typically occur from 16, 15 and 14 December. Overall, investing from these dates brought an average annual return of 2.53%, and a positive return 87% of the time. In contrast, investing over the first half of the month yielded an average loss of -0.23%. Read more about this analysis.
While you can get a broad idea of when a Santa rally might start by looking at historical data, each year’s Santa rally will be different. It might start early, it might start late, or it might not start at all. You can only know for sure if a Santa rally has taken place once it is already over.