As Goes January, So Goes the Year...

And so we say goodby to January 2016.

There is an old saying on Wall Street that as goes January, so goes the year.  This is also known in some circles as the 'January barometer.'

If this is the case it is going to be a good year for precious metals and a very wild ride for stocks.

It certainly did not 'work' last year, which also forecast a good year for the metals and a bum year for stocks.  The metals continued their bear market decline, but stocks were in fact down to flat.

Ah, if only life and forecasting was that simple so that a single metric would suffice.

January investment Barometer: As Goes January, So Goes the Year

Here is how some investment options have fared for the month of January.

I wonder how many people would have known this based on what they have heard from pundits and the financial press.

 

 

SP 500: This Time Last Year and the January Barometer

Try not to get in front of this in case Benny decides to turn back the odometer and shift this pig into overdrive for the sake of public confidence.

"Did you know that there are two seasonal patterns with an accuracy ratio of 90% or higher? This is no joke. The numbers don't lie, but there is one caveat.

The January Barometer has a 90% rate of success. The essence of the January Barometer is simple, as January goes, so goes the year. If January is up, the entire year will be up and vice versa.

90% Accuracy - Too Good to be True?

From 1950 to 2008 this pattern has played out most of the time. There were only five times when it outright failed and seven times when it wasn't exactly accurate. According to the Stock Trader's Almanac, the Barometer has a 90% accuracy ratio. In terms of odds, that's about as good as it gets.

However, the January Barometer led investors in the wrong direction in 2001 when the S&P was down a full 13% at the end of the year after being up 3.5% in January. Again, there was a major misfire in 2003 when the S&P finished with a 26.4% gain after a 2.7% January loss.

There was a minor misfire in 2005, but the Barometer couldn't have been more wrong in 2009 and 2010. In 2009 the S&P was down 8.6% in January but ended the year with a 23.5% gain. After a 3.9% January loss last year, the S&P (SNP: ^GSPC) finished with a 12.6% gain."

ETFguide

The January Barometer to Date