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Santa Claus Rally – Fact or Fiction?

4 December 2019 |Insights
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Santa Claus Rally – Fact or Fiction?

4 December 2019 |Insights

By Jonathan Agar - Business Assessment & Risk Analyst - Leveraged

The concept of a ‘Santa Claus or Christmas rally’ is not new to financial markets and has been part of both business and financial vernacular since 1968 when Yale Hirsch (editor-in-chief of the Stock Trader’s Almanac) first coined the term. But what exactly is a Santa Claus rally, and how can investors prepare for this phenomenon?

The Santa rally is a seasonal pattern in the share market, whereby the market rallies in the lead up to Christmas and into the New Year. The exact time the rally occurs is open to interpretation, however December and January have traditionally seen average returns across the two-month period in Australia of 2.52% ^.

Causal nexus or Christmas cheer?

The cause of the rally is not definitive but rather accepted as a confluence of factors, notably the ‘feelgood’ lead up to the holiday period, optimism about the new year ahead, absence of data and news out of the northern hemisphere markets which in many ways provides clear air for markets and stocks to shine.

Whatever the cause, with official rates at new lows, a rebounding domestic property market, stabilising commodity prices and the US market at all-time highs, conditions in Australia for a Santa Claus rally are looking promising. However, we mustn’t forget that the looming US-China trade talks and President Trump’s impeachment trial could still swing the market either way.

So how can investors make the most of this phenomenon?

Simply don’t try to time the market to perfection. As one thing is for sure, Santa won't be ringing his bell at the start or the end.

If you have any questions or would like to discuss how Leveraged can assist with achieving your financial goals, please contact us on 1300 307 807.

Gearing involves risk. It can magnify your returns; however, it may also magnify your losses. Issued by Leveraged Equities Limited (ABN 26 051 629 282 AFSL 360118) as Lender and as a subsidiary of Bendigo and Adelaide Bank Limited (ABN 11 068 049 178 AFSL 237879). Information is general advice only and does not take into account your personal objectives, financial situation or needs. The views of the author may not represent the views of the broader Bendigo and Adelaide Bank Group of companies (“the Group”). This information must not be relied upon as a substitute for financial planning, legal, tax or other professional advice. You should consider whether or not the product is appropriate for you, read the relevant PDS and product guide available at, and consider seeking professional investment advice. Not suitable for a self-managed superannuation fund.

Examples are for illustration only and are not intended as recommendations and may not reflect actual outcomes. Past performance is not an indication of future performance. The information provided in this document has not been verified and may be subject to change. It is given in good faith and has been derived from sources believed to be accurate. Accordingly no representation or warranty, express or implied is made as to the fairness, accuracy, completeness or correction of the information and opinions contained in this article. To the maximum extent permitted by law, no entity in the Group, its agents or officers shall be liable for any loss or damage arising from the reliance upon, or use of the information contained in this article.

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