If you want to improve your forecasting ability, you’d do well to start here: For 19 out of the past 23 years the UK 100 has delivered gains into year-end. These ‘traditional Santa Rallies’ have often seen the index itself top gains of 3% between early November and late December while some of its stocks have gone up by 10% or more. These are not random occurrences either. The santa rally comes about when fund managers refuse to sell their outperforming (hence popular), stocks in a window-dressing exercise, hoping to attract new clients for the new year. The santa rally is such a simple concept, and the statistics show that it’s real. With demand high, supply kept low and thin trading volumes as a result, upwards price action is often magnified. Ergo those who get into the right stocks early stand to profit handsomely over this 2-month period. Oh, and it starts right now!

As an example, we’ve seen Aberdeen Asset Management (ADN), ARM Holdings (ARM) and Randgold Resources (RRS) among many others post average gains of 9.5%, 13.5% and 9.1%, respectively, between Nov and Dec over the past 14 years. What’s more, the same stocks come up time and again in our analysis in terms of number of up-years and percentage performance over the Nov-Dec period. So we’ve put together a report that details the background to the santa rally – a very simple yet potentially highly lucrative effect – as well as looking at what factors might change things this time round. You can get access to it here. Don’t miss out on another opportunity to experience what it feels like to call the markets right (it feels pretty good, by the way!)

Augustin Eden, Research Analyst