Tuesday, February 2, 2010

January Barometer

OK. I am sitting here on the last business day of the month of January (the 29th) and the market is down again today, the S&P is down 41 points for the month of January, or about -3.7%. That brought to mind the "January Barometer" which is based on the old saying "As goes January so goes the year." Well, this actually works about 69% of the time. Think of it as starting a race with a head start. But you've got to remember that 69% is not the same as 100%. For instance, the market was down in January 2009 (S&P 500 -8.43%) and rallied throughout the year and finished up for the year 2009 (S&P 500 26.46%). So, it isn't foolproof. And as the affable and somewhat bombastic Jim Cramer of Mad Money on CNBC rightfully says. there's always a bull market in something, somewhere. However, anything that is right about 69% of the time should at least given some consideration.

So be careful investing in 2010.

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