All we are saying is give Dec(ember) a chance

Jay Kaeppel
2021-12-03
November ended badly for stocks, and December initially picked up where November left off. But stock market performance during December has historically been favorable. This is especially true if we compare the performance during post-election year December to the average performance of all months.

Key Points

  • December 2021 is off to a rough start - hopefully it is setting the stage for a rally later this month
  • December has historically been one of the best-performing months for stocks
  • December of Post-Election years have seen particularly favorable stock market action

Establishing the baseline

For testing, we will use the monthly closing price of the Dow Jones Industrial Average from 12/31/1900 through 11/30/2021.

The table below displays a monthly performance summary for all 1,451 months included in the test period.

Dow performance during December of Post-Election Years

We look at December 1901, 1905, 1909, etc. The chart below displays the growth of $1 invested in the Dow only during December of each post-election year starting in 1901.

The chart below displays the performance of December of each post-election year since 1901.

The table below displays a summary of monthly performance for all 30 post-election Decembers since 1901 compared to the baseline results for all months starting in 1901.

What the research tells us…

  • December of the post-election year has a solid history
  • As long as major market averages hold above their longer-term moving average, investors may do well to give the bullish case the benefit of the doubt as December 2021 unfolds

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