Follow and listen to our podcast

StashLearn
Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Teach Me

What’s the “Santa Claus Rally” Anyway?

December 05, 2018

A “Santa Claus rally” refers to an increase in stocks that sometimes occurs during the last week in December and first few days of January.

1 min read

Every Christmas, Santa Claus brings gifts for all the good boys and girls of the world. And for some investors, in the past, he has also brought a year-end boost to their portfolios.

What’s a “Santa Claus rally”?

You may not think that Santa has much to do with the financial markets, but it’s not unusual for the stock market to rise during the holiday season. These sustained increases in stocks, typically during late December and early January, are what many people call the “Santa Claus rally”.

What does a Santa Claus rally actually look like? On average, the stock market has gained 1.3% during the last five days of December and the first two days in January, since 1950, according to reports.

It’s important to note, however, that a Santa Claus rally doesn’t always occur, and there’s absolutely no guarantee that one will occur. For example, the S&P 500 missed out on a Santa Claus rally in 2004, 2007, and 2014.

What causes a Santa Claus rally?

There isn’t a single factor that contributes to a Santa Claus rally, assuming one occurs. But analysts typically point to increases in consumer spending. The holiday season is shopping season, after all, and consumers are opening their wallets for gifts, dinners out, and decorations.

And since many investors become preoccupied with the holiday shopping season, investing activity can dip—leaving an opening for other traders who scoop in and drive up stock prices. Other factors may include increased optimism about the economy, and a reluctance by governments and businesses to report bad news—in an effort not to dampen the holiday spirit.

Should you take a ride on Santa’s sleigh?

While the Santa Claus rally has occurred before, it’s important to remember that nothing is guaranteed. You’re likely better off sticking to a regular schedule by investing small amounts over a long period of time.

Remember, it’s time in the market—not timing the market.

Santa has his Christmas tricks. But Stash has financial tips. Sign up for our newsletter to keep up.

By Sam Becker
Sam Becker is Stash's financial writer.

Next for you
Why the Holiday Season is The Super Bowl of Retail

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
love and money Retirement budgeting social media money lessons
Disclaimers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.