Bad Januarys Equal Bad Februarys?

Last month, the S&P 500 index dropped 8.6%, which was the worst January on record. Naturally, that has some people wondering if this month will be any better. Unfortunately, history suggests otherwise.

Since 1928, the market has declined in the first month of the year on 29 out of 81 occasions, or 35.8% of the time. The median loss during those losing Januarys has been 3.8% versus an overall average gain of 1.6%.

On balance, performance in the month after a weak January has also been a downer. Over the past eight decades, the follow-on February has seen the S&P 500 decline on 18 separate occasions, or 62.1% of the time, with a median loss of 1.8%. That compares to an average rise of 0.1% for all Februarys from 1928 – 2008.

So, while I have been among those who have been anticipating a first-half recovery (before a resumption of the bear market later in the year), the historical record suggests I just might have to wait until this month blows over first.

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