January Metrics & Investing Goals for 2024

As we bid farewell to 2023, the impressive “Santa Claus” rally prompts us to ponder what insights it offers for the upcoming year. The significance of this being a Presidential election year adds another layer of intrigue. Considering these considerations, it is an opportune moment to revisit our investor resolutions. However, before we commit to these resolutions, let’s delve into what January might unfold for us.

The January Barometer The onset of the New Year is often surrounded by numerous “Wall Street Axioms” as investors eagerly attempt to anticipate the trajectory of the next twelve months. Familiar phrases like the “Superbowl Indicator,” “So Goes The First 5 Days, So Goes The Month,” and “So Goes The Month, So Goes The Year” are part of this annual ritual.

While predicting the market’s movements beyond a few days may be viewed as a somewhat futile, it remains a traditional practice as the old year transitions into the new. Despite Wall Street’s tendency to express overly optimistic year-end projections, reality has often deviated from these expectations.

From an investment management standpoint, it is insightful to examine statistical evidence for January to discern potential future performance trends. Through this analysis, we can appreciate the risks that may lie ahead.

According to StockTrader’s Almanac, the direction of January’s trading (gain/loss for the month) has accurately predicted the entire year 75% of the time. Examining the broad historical perspective, the chart below illustrates January’s performance trends since 1900.

Moreover, in twelve out of the last sixteen presidential election years, the direction set by January has continued to influence market trends. Addressing the context of presidential election years, the preceding year, 2023, adhered to the pattern of being a robust return year, consistent with the historical norm observed over the past century. Looking ahead to 2024, being a Presidential election year, the statistical outlook is favourable, boasting a high win rate with an average return of 10% and a notable 76% chance of success.

Examining the Details

The table and chart provided below present the monthly statistics for the S&P 500. A noticeable observation is the presence of significant outliers, such as August, which recorded a remarkable 50% one-month return. It’s crucial to highlight that these anomalies took place during the 1930s, notably in the aftermath of the 1929 market crash

The key takeaway is that January typically emerges as one of the most favourable months for returns throughout the year, contrasting with notably weaker performances in February and March.

January is the most favourable month for returns, closely followed by December, April, and July.

However, it’s crucial to note that January doesn’t consistently end as a winner. Despite the favourable statistical odds, especially following a robust start, there are instances where it deviates from this pattern. It’s noteworthy that while January’s maximum positive return reached 9.2%, the most moderate downturn was observed with a maximum drawdown of -6.79%.

After experiencing a significant “Santa Rally” in December, our attention will be focused on closely observing January for insights as we navigate into 2024. Anticipating a potential scenario of a weaker January is not unfounded, considering stocks may be excessively extended and overbought from the previous month.

The Persistence of Our Errors

Each year, Dalbar Research releases an extensive study consistently highlighting three primary reasons behind investor failures.

Identifying the Root Causes

The critical issues contributing to investor failures, as defined by Dalbar, primarily revolve around a lack of capital and psychological factors. Dalbar’s research outlines nine specific irrational investment behavioural biases:

  1. Loss Aversion: The fear of loss prompts capital withdrawal at the most inopportune moments, commonly referred to as “panic selling.”
  2. Narrow Framing: Making decisions about individual portfolio components without considering their impact on the overall portfolio.
  3. Anchoring: Fixating on past events and resisting adaptation to changing market conditions.
  4. Mental Accounting: Mentally segregating investment performance to rationalize both success and failure.
  5. Lack of Diversification: Believing a portfolio is diversified when, in reality, it comprises highly correlated assets.
  6. Herding: Following the crowd’s actions, often resulting in the “buy high/sell low” phenomenon.
  7. Regret: Failing to take necessary actions due to regret over past failures.
  8. Media Response: Media bias toward optimism, driven by the need to sell products from advertisers and attract viewership.
  9. Optimism: Excessively optimistic assumptions that may lead to significant reversions when confronted with reality.

The most substantial contributors to investor mistakes over time are the “herding effect” and “loss aversion.” As markets ascend, individuals tend to believe in the indefinite continuation of the prevailing trend. The more prolonged the upward trend, the more deeply ingrained this belief becomes. Eventually, even the most hesitant investors succumb to the trend, participating in the market’s evolution into a euphoric state.

The cycle then repeats itself.

As we enter 2024 with the echoes of a bullish 2023 still resonating, it’s evident that investor allocations to equities remain high, accompanied by a prevailing sense of optimism. However, given the historical tendency of investor behaviour to deviate from the “buy low/sell high” rule, the risk of disappointment looms large.

This underscores the importance of adopting a set of resolutions:

Investor Resolutions for 2024:

  • Do more of what is working and less of what isn’t.
  • Remember that the “Trend Is My Friend.”
  • Be either bullish or bearish, but not “hoggish.” (Hogs get slaughtered)
  • Remember, it is “Okay” to pay taxes.
  • Maximize profits by staging my buys, working my orders, and getting the best price.
  • Look to buy damaged opportunities, not damaged investments.
  • Diversify to control my risk.
  • Control my risk by always having pre-determined sell levels and stop-losses.
  • Do my homework. I will do my homework. I will do my homework.
  • Not allow panic to influence my buy/sell decisions.
  • Remember that “cash” is for winners.
  • Expect, but not fear, corrections.
  • Expect to be wrong, and I will correct errors quickly.
  • Check “hope” at the door.
  • Be flexible.
  • Have the patience to allow my discipline and strategy to work.
  • Turn off the television, put down the newspaper, and focus on my analysis.

While adhering to these resolutions is a constant effort and occasional failures may occur, the practice of reviewing these guidelines serves to reset focus for the New Year. Successful investing is not an easy road, but following basic rules, maintaining discipline, and staying focused significantly increase the odds of long-term success.


Contrary to the prevailing advice of solely adopting a “buy and hold” strategy, the reality of potential capital destruction during significant market declines is a more complex issue. With elevated market valuations, heightened leverage, and signs of economic weakness, the month of January becomes a critical period for observation. The weight of evidence suggests that 2024 could unfold as a year of disappointment, despite the ongoing “bullish calls” for the markets in the year ahead. Vigilance, along with a commitment to these resolutions, is paramount in navigating the uncertainties that lie ahead. Pay attention and stay true to your resolutions.

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