Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Have We Missed The Santa Claus Rally? Here’s What You Need to Know!
Ruby Layram
31st Dec 2024
The Santa Claus Rally is usually a time when the stock market ends the year on a high note, spreading some extra cheer to investors.
But this year, the rally is yet to show up (as of December the 31st), leaving many people scratching their heads and wondering what’s next.
In this post, I’ll take a look at why the rally is yet to show up, what it could mean for 2025, and, most importantly, how you can navigate the market with confidence in the year ahead.
The Grinch Stole The Santa Claus Rally!
Historically, the last five trading days of December and the first two of January have been bullish, with the S&P 500 typically gaining 1.3% during this period.
But in 2024, the market has had other plans, falling by 1.1% since Christmas Eve. This decline is as rare as a white Christmas (in the UK at least!), occurring only twice since 1950.
The absence of the Santa Claus Rally has left investors feeling like they’ve bitten into a blue Quality Street —confused and a bit disappointed.
Analysts are cautioning that this could signal a bumpy sleigh ride into January, with rising Treasury yields and potential profit-taking activities adding to the market’s holiday hangover.
What Does This Mean for 2025?
If the market’s holiday spirit is any indication, 2025 might not be the year of the bull.
Concerns are mounting over potential economic slowdowns, with some analysts predicting a liquidity crunch due to the Federal Reserve’s policies.
China’s economy is facing low consumer spending and potential deflation, leading to possible currency devaluation conflicts with the U.S.
Europe’s political instability threatens bond markets, particularly in France and Germany.
The UK may experience stagflation, with wage growth surpassing forecasts and economic growth stagnating.
However, it’s important to understand that the Santa Clause Rally isn’t some holy grail! Just because the markets didn’t prosper this Christmas, doesn’t mean that 2025 will be doom and gloom for investors.
In truth, there is no way of knowing what will happen when January rolls around.
I recommend keeping your ear to the ground, reading reputable news publications and seeking out expert opinions. It’s always good to stay in the loop!
It’s also worth noting that we aren’t out of time yet! The official Santa Claus Rally period will end on Friday the 3rd of January, which means that there are still three days left for the market to turnaround.
How Should Investors Respond?
2024 is not the first time that the Santa Claus Rally has failed to provide investors with returns.
Although the news might be a bit depressing, there are a few ways that you can keep your head above the water and make smart investing decisions in the fall out of the festive season.
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- Diversify your portfolio: Spread your investments across various sectors and asset classes to cushion against market volatility. Here is a useful guide on how to build a diverse portfolio that you can use to get started.
- Stay informed: Keep an eye on economic indicators and market analyses to make informed decisions. Knowledge is your best defence against market volatility.
- Adopt a long-term perspective: Focus on long-term investment goals rather than short-term market fluctuations. Remember, Rome wasn’t built in a day, and neither is a solid investment portfolio.
- Avoid emotional investing: Don’t let a bumpy stock market throw you off! Stick to your strategy and understand that market dips are a normal part of the cycle.
While the absence of the Santa Claus Rally in 2024 might feel like a lump of coal in your investment stocking, it’s not the end of the world.
By staying informed, diversifying your investments, and keeping a long-term perspective, you can navigate the potential challenges of 2025 with confidence.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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