Let's put those Christmas bonuses to work! The Santa Claus rally is coming, but he won't be stopping by to give every sector gifts this year. So, we've detailed where the best investments will be made going into 2015. These are the sectors that are firing on all cylinders right now even though some sectors are in turmoil.
Most investors have heard of the Santa Claus rally, but some believe it as much as Santa Claus himself. Yet, they make be too quick to judge.
The idea of the Santa Claus is that the market rises during year-end holiday season as joyful investors are using their Christmas bonuses to buy stocks.
But Wall Street wasn't feeling all that jolly for the first part of December after a gutting of oil prices and any stock remotely tied to oil.
However, despite the uncertainty surrounding oil, the market could still see the mysterious Santa rally over the next couple weeks.
A little history
Historically, December has been one of the strongest months of the year for the market (in tight competition with July). Since 1928, the S&P 500 has been up during the month of December 75% of the time — posting an average gain of 1.5%.
What's more, over the last 50 years the Dow Jones Industrial Average (DJIA) has been up 70% of the time for the month of December. And the average gain for the DJIA has been 1.6% during that month.
More recently, the Santa rally has been stronger. The S&P 500 has been positive for the month of December in each of the last five years — posting an average gain of 2.4%.
And while the Santa Claus rally is generalized to include the entire month of December, it's generally the last half of the month that does all the heavy lifting — specifically the week between Christmas and New Years.
This comes as the majority of tax loss selling and window dressing (i.e. selling off unpopular names so they don't show up on year-end reports) was done earlier in the month. Now, over the next week or so, investors will be looking to invest in the winners of 2015.
