My Blog, Your Money

Here’s another one: the January Barometer.  It states that the S&P 500’s performance for a year is tied to its performance in January.  So if the S&P has a winning January, the theory predicts that the year’s performance will be positive and vice versa.

So how accurate is it?  Well, over the past 40 years, it’s been correct 32 times or 80%.  While that’s a pretty heady percentage, it hasn’t been very accurate over the past decade with accuracy of just 60%.  In fact, the past decade has actually bogged down the theory’s accuracy and if you exclude it, the theory’s accuracy jumps to 87% over the 30 years from 1970 to 1999.

With that said, what’s the prediction this year?  January was a not a good month for the market and the S&P 500 dipped 3.82%.  That foretells a down year, but I’m going to bet that this is another year where the prediction is wrong and the market will actually repeat last year’s positive performance.  Here’s hoping I’m right.