Tags: Santa | Rally | Stuck

Santa Claus Rally Stuck in the Chimney!

Friday, 21 Dec 2007 02:50 PM

Many stock market pundits, including Goldman Sachs Chief Investment Strategist Abbey Joseph Cohen, began telling their clients in late November that stock prices would rally strongly throughout December and end the year on a positive note.

I wasn't surprised when I first heard these comments. These "experts" were simply basing their forecasts on the type of positive stock market activity that usually occurs during pre-presidential election years and from mid-November through the end of December — of most years.

For example, since 1947, the Dow Jones Industrial Average has never recorded lost ground during the year leading up to a U.S. presidential election.

Current data suggests that the Dow will end this year in positive territory. Yet the Dow is now up only 6 percent, compared to an average pre-election year return of 19 percent since the end of World War II.

Meanwhile, the S&P 500 Index — which is a better measure of the stock market's overall performance — has advanced just 2.6 percent since the beginning of the year.

Many pundits are calling, too, for a "Santa Claus rally," a surge in stock prices during the week between Christmas and New Year's. However, my research suggests that stocks won't rally in their normal way this Christmas.

I first commented on this subject on Nov. 21 when I told our readers that my investment models indicated that this year would be one of those rare exceptions when stocks would not experience their typical November-to-December rallies.

I also told our readers then that my models indicated that the nation's major retail chain stores would experience a disappointing Black Friday on the day after Thanksgiving, and that I expected the Wall Street cheerleaders to soon afterwards throw in the towel.

Thus far, my forecast has been accurate, as more and more "analysts" are now forecasting a dismal winter holiday shopping season this year.

Meanwhile, the performance of the major stock market indices over the past two weeks suggests that Santa might get stuck in the chimney this Christmas!

Not because he will be too fat or carrying too many gifts. Rather, Santa won't be able to propel himself down the chimney because he is simply worn out from the innumerous phone calls he's been receiving from his mortgage company and other debt collectors over the past couple of months.

Santa and his reindeer are also lacking the necessary energy to continue delivering gifts to households throughout the U.S. because he hasn't had enough money to pay for the soaring cost of reindeer feed — grain prices are through the roof!

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DavidFrazier
Many stock market pundits, including Goldman Sachs Chief Investment Strategist Abbey Joseph Cohen, began telling their clients in late November that stock prices would rally strongly throughout December and end the year on a positive note. I wasn't surprised when I first...
Santa,Rally,Stuck
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2007-50-21
Friday, 21 Dec 2007 02:50 PM
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