November 18, 2022
When it comes to holiday season investment lore, the Santa Claus Rally is as legendary to retail shareholders as the name behind it. The Santa Claus Rally describes the week before Christmas when stocks have historically risen.
There is historic precedence for the yuletide bump. The S&P 500 has gained, on average, 1.3% during the five days leading up to Christmas and the first two trading days of the New Year. During these seven trading days, stock prices have historically risen 76% of the time – far more than the average performance over a 7-day period, though there is no guarantee it will continue. The phenomenon was first identified by Yale Hirsch in his “Stock Trader’s Almanac” in 1972.
No one is quite sure why the Santa Claus Rally occurs, though theories abound. Some claim the rally occurs as institutional players make end-of-the-year adjustments as they try to close their books before the Christmas holiday. It could be caused by the absence of those institutional investors who are on vacation and leave the market to retail shareholders, who tend to be more optimistic. Others say it is simply driven by the holiday spirit, increased holiday shopping or the investment of holiday bonuses.
Investopedia analysis suggests there is only a marginally positive opportunity in trading the so-called Santa Claus rally. The data that it examined shows a roughly 60-65% chance of a positive week in the run up to Dec. 25. “However, the risk-reward balance is decidedly skewed to the negative side. Of the average winning day in the period, the return was +1.85%, while the average losing day was -3.28%.”
Regardless of how the market performs or if the Santa Claus Rally materializes in 2022, retail investors who connect their brokerage on TiiCKER can fill their Christmas stockings early with valuable shareholder rewards simply for owning shares of the stocks they love.
Individual investors, for example, who hold 10 shares of Lionsgate (Tii:LGF) are eligible for its Lionsgate Shareholder Red Carpet Rewards and can receive a perk bundle that includes $1 off your next movie via Atom Tickets, 20% off merch in the Lionsgate Shop and 50% off a STARZ app subscription for 12 months. Shareholders of Real Good Foods (Tii:RGF) who hold just 10 shares can use their rewards to help feed their holiday guests with a $50 Instacart gift card. Hundreds of additional shareholder rewards are available on the TiiCKER platform to individual investors who create a free account.
Will the Santa Claus Rally materialize in 2022? It is impossible to say, but those investors hoping for one might end up with a lump of coal. The Dow Jones Industrial Average has performed better in years following holiday seasons in which the Santa Claus Rally does not materialize.
TiiCKER was created for fan-first, brand-first public companies—with exclusive perks served-up weekly to shareholders. Own stock? Connect your brokerage account to view more than 130 perks waiting for you right now!