The chance of a January Effect occurring next month isn't much more optimistic.
The January Effect is the historical outperformance of value stocks during the month of January. It most often occurs among stocks that have succumbed to tax-loss selling late in the fourth quarter, have attractive valuations in January, and whose market capitalizations make them smallcap stocks. The problem heading into the end of year is that smallcap stocks have been on a tear and there just isn't much value out there.
As of last Friday, the S&P SmallCap 600 index {SML.X} was up 35.6% year-to-date. The S&P SmallCap 600/Barra Value index {CVK.X} was up 36.5 percent. These numbers indicate that what was once a bargain is no longer a steal anymore.
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