Good morning,
There's an old saying that as January goes, so goes the market. This refers to a theory called The January Barometer. This theory was first floated in 1972, but how accurate has it been?
It's been really accurate. Throughout its "history," the barometer has an accuracy rating above 80%.
The Stock Trader's Almanac shows that when the S&P 500 had positive returns in January, the average return for the year since 1950 is 17.6%.
Put all of this together, and it's clear that investors should consider putting money to work in the stock market.
Because markets are off and running. As of February 7, 2024:
- The S&P 500 Index is up around 6.3%.
- The tech-heavy Nasdaq index is up more than 30%.
- The Dow Jones index is up more than 13%.
And analysts are becoming bullish about earnings growth for the rest of the year. They see 7 out of 11 market sectors reporting higher earnings.
But, the rally is still not as broad-based as some analysts would like. For example, bellwether stocks like Apple and McDonald's have started the year in negative territory.
Still, there are always opportunities to be found. And MarketBeat is passionate about helping you find those opportunities.
That's why we've put together this special presentation to point you to seven stocks that had a strong January but may not be done yet. These are stocks you can feel free to chase higher or buy on the dip.
View the 7 Stocks to Help You Build Off January's Gains
Don Miller
MarketBeat
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When a new year starts, it's a bit like getting a new toy. Everyone is excited, has new plans, and wants to do their best. In the world of investing in stocks, the new year can also give a boost, kind of like a rocket getting extra fuel. This is because many people and companies are starting fresh and have new goals for the year.
At the beginning of a new year, some investors feel more hopeful and ready to invest in stocks. They might have new money to spend from holiday gifts or bonuses from work. This can make the stock market busier, and sometimes, the prices of stocks go up because more people want to buy them.
Here's what's special about the new year's boost in the stock market:
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New Year's Resolutions: Just like you might make a resolution to read more books or help out more at home, investors make resolutions too. They might decide to invest more money or try investing in different kinds of stocks.
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Fresh Start Feeling: The new year feels like a new beginning. Companies share their plans for the year, like making new products or growing their business. This can make people excited and more willing to invest in these companies.
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End of Year Reports: Companies often share how well they did the previous year. If a company did really well, more people might want to buy its stocks.
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Predictions for the New Year: Experts often make predictions about what will happen in the new year. They might say which types of stocks or industries will do well. This can influence where people decide to put their money.
Now, even though the new year can give a boost to the stock market, it's important to be careful. Here's why:
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The Boost Can Be Short-Lived: Sometimes, the excitement of the new year doesn't last very long. The stock market can go back to normal after a few weeks or months.
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Not All Predictions Come True: Just like sometimes weather forecasts aren't right, not all predictions about stocks come true. It's important to do your own research and not just follow what others say.
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Stay True to Your Plan: If you're investing in stocks, it's important to have a plan and stick to it. Don't change everything just because it's a new year. Think about what's best for you in the long run.
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Diversify Your Investments: This means don't put all your money into one kind of stock. Have different types so that if some don't do well, others might be doing better.
In summary, the new year can bring a boost to the stock market, like a burst of energy. People make new resolutions, feel excited about fresh starts, and companies share their plans for the year. But remember, this boost might not last very long, and not all predictions will come true. It's important to do your research, stick to your plan, and have different kinds of stocks in your investment collection. Investing is a bit like a journey through the year – there are ups and downs, but with a good plan and smart choices, you can make it a great adventure.
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