For January Effect we have terms and definitions in 3 topics. The topics are Finance, Financial and Investing.

January Effect (Finance)

Refers to the historical pattern that stock prices rise in the first few days of January. Studies have suggested this holds only for small-capitalization stocks. In recent years, there is less evidence of a January effect.

January Effect (Financial)

Is the tendency for small capitalization stocks to exhibit an upward bias in their price behavior. Some analysts believe that this may be partially attributable to the influence of index funds buying stocks for various retirement plans. Such new contributions would be qualified to commence in January. Also, the marginal impact of such purchases would be greater on smaller capitalization issues as opposed to larger capitalization stocks. Is the tendency for small capitalization stocks to exhibit an upward bias in their price behavior. Some analysts believe that this may be partially attributable to the influence of index funds buying stocks for various retirement plans. Such new contributions would be qualified to commence in January. Also, the marginal impact of such purchases would be greater on smaller capitalization issues as opposed to larger capitalization stocks.

January Effect (Investing)

Event that starts on the last day of December and ends on the fourth trading day of January--stock prices have historically tended to rise considerably. The January Effect is caused by year end selling for tax losses, recognizing capital gains, or effecting portfolio window dressing. Even though the sell off depresses the stocks, it has nothing to do with their basic worth. Bargain hunters may quickly buy in and thus, cause the January rally.

See Also: Capital Gain; Technical Analysis

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