Do The Corner’s readers feel in need of some optimistic note? Here you are, thanks to JP Morgan: although up until next Friday the volatility in the S&P 500 may increase due to the fact that on that day $385bn in options reach maturity, JP Morgan has published an analysis of the effect known as end of year. Smile.
It looks at the historical performance, since 1920, of the market from ‘Thanksgiving’ (4th Thursday in November) until the end of the year. The result is quite dramatic and positive:
“In 77% of the years, the S&P500 rallied at the end of the year, rising on average +2.5. There was only one year when it plummeted and that was during the Depression (1931) with end of year returns of -14.8%. Also, in 2002 it fell by over 5%. However, there are more than 15 years with yields above 5% during this 5-6 week period. The rally tends to be stronger in the years that the market has been positive, being in such cases a +3.4% on average, and occurring in 82% of the years.”