Five Things to Know About December
The final month of 2024 is here, and this week we wanted to show why the chance of another strong month to end this record-breaking year is likely. Here are five things to know about December.
First, you should know about the Santa Claus Rally (SCR). The SCR is named for the period that includes the last five trading days of December and the first two trading days of the new year. You will hear all about the SCR over the coming weeks. Just know it isn’t about the full month — it is about the late year/early year rally we get most years. We will discuss the Santa Claus Rally more later in December.
Second, December is the S&P 500’s second best month of the year in an election year, with only November better. Given stocks have soared so far in November, this one is playing out again so far. Also note, December is higher 83.3% of the time, making it the most likely month in an election year to be higher.
Third, since 1950, December has been the third best month on average (only April and November are better). In the past decade it has been only the 10th best month, thanks in part to a 6% drop in 2022 and a 9% crash in 2018.
Fourth, no month has been more likely to be higher overall, with the S&P 500 up in December nearly 75% of the time. The next closest has been April, up more than 71% of the time.
What about if stocks are up a lot going into the final month? History says a chase into year-end is quite possible. We found the past 10 times the S&P 500 was up at least 20% going into December, that final month gained nine times and was up a solid 2.4% on average.
20% Back-To-Back Years Bode Well for 2025
Many bears are back at it, claiming that because stocks are looking at back-to-back 20% gains 2025 must be doomed. Fortunately, all we have to do is look at the data to see they once again could be on the wrong end of this amazing bull market.
Using total returns (since 1950) we found eight other times stocks gained 20% two years in a row and the next year was higher six times and up a solid 12.3% on average. Now what really stood out to us about the data below is the mid- to late-1990s saw an incredible record five years in a row of 20% or more gains. We didn’t have social media back then, but I could only imagine how mad that would have made the bears.
2024 of course isn’t over yet, but it is pretty incredible that as strong as last year was, this year is up more right now. The past few weeks we’ve discussed why we think this bull market is alive and well, but we also see no major reasons to expect the economy to fall into a recession in 2025.
The bottom line is up 20% two years in a row actually suggests the potential for better-than-average returns in 2025, something we are on record as expecting next year.
This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The NASDAQ 100 Index is a stock index of the 100 largest companies by market capitalization traded on NASDAQ Stock Market. The NASDAQ 100 Index includes publicly-traded companies from most sectors in the global economy, the major exception being financial services.
A diversified portfolio does not assure a profit or protect against loss in a declining market.
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