The Santa Claus rally
Endowus Insights
Join our in-person China & HK Market Outlook event with Abrdn, Allianz Global Investors, and JPMAM. RSVP here

The Santa Claus rally

28 Apr
8 Dec
"The facts suggest that successful market timing is extraordinarily difficult to achieve."

Beneath their dark-suited number-crunching demeanour, the Wall Street honchos secretly believe in Santa Claus. They believe stocks rally in the trading days between Christmas and New Years, and the first two trading days after New Years. But then again, "the Santa Claus rally" is just one of the many silly rhymes Wall Street has coined - my favourites include "Sell in May and go away" and "The trend is your friend".

Here are some facts:

  • According to the 2022 Stock Trader's Almanac, from 1969 to 2020, the "Santa Claus Rally" yielded positive returns in the stock market in 40 of the past 52 holiday seasons, with an average return of 1.3%.
  • Since 1896, the Dow Jones Industrial Average has risen 77% of the time during that period.
  • From 1952 to 2020, the S&P 500 saw 51 December advances and 18 declines, with an average return of 1.43%.

Wall Street has come up with all sorts of reasons for this, such as tax-loss selling (selling securities which have incurred losses during the year in order to reduce capital gains taxes) and window-dressing (buying best performing securities to pretend one has been holding winning stocks all along). Other theories are more of a stretch - some like to believe the bears are on vacation and that it's holiday season induced optimism.

We would love for market anomalies to be so obvious, but the fact of the matter is, when datasets are expanded, these 'anomalies' fade into normalcies with no statistical significance. In a recent statistical study on 30 years of market returns data, it was strongly concluded that December looks no different from any other month in the year. There is no evidence that any month is statistically better - or worse - than other months.

What does the Santa Claus rally mean for your portfolio? Nothing. Considering the number of random variables in the universe, some of these supposed market anomalies will exhibit a correlation with returns by chance alone. Instead of betting your fortune on Santa spreading his goodwill around the markets, stick to your investment plan, invest in proven strategies that have stood the test of time, and enjoy your eggnog.

Some proven strategies we have written on:

With Endowus, you can effortlessly invest in these proven strategies of globally diversified, low-cost funds and portfolios seamlessly - instead of having to spend your holidays DIY and calculate the odds of a potential Santa Claus rally!

To get started with Endowus, click here.


Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. 

This article is not intended to be relied upon as a forecast or research or investment advice, and should not form the basis of any investment or other decisions. The information contained herein is not intended, and should not be construed, as any legal, tax, regulatory, accounting or financial advice. If you would like investment, accounting, tax or legal advice, you should consult with your own professional advisors regarding your individual circumstances and needs.

The information in this article may not be suitable for all investors. You are responsible for any action that you take or decision that you make in reliance on any content in this article, and you agree that Endowus HK Limited (“Endowus”) is not liable under any circumstances.

No invitation or solicitation

Neither the information, nor any opinion, contained in this article constitutes a recommendation, offer or solicitation  by Endowus or its affiliates to you to buy or sell any securities, collective investment schemes or other financial instruments or services, nor shall any such security, collective investment scheme, or other financial instruments or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. 

This is not intended to be an invitation or offer made to the public to subscribe for any financial product or to enter into any transaction.

Accuracy of Information

Whilst Endowus has made reasonable efforts to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or errors in any such information. Endowus does not warrant or represent that the information in this article is correct, accurate or reliable. 


Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.  

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this article are subject to market influences and contingent upon matters outside the control of Endowus and therefore may not be realised in the future. 

In presenting the information above, none of Endowus, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances.

This article has not been reviewed by the Securities and Futures Commission of Hong Kong.

More on this Tag
No items found.
All you need to know about personal finance and investing
Please wait while we are submitting your email...
Thank you! Your submission has been received!
invalid email address

Table of Content