Bogus Effect This time of year, we often find ourselves reading about the “January Effect,” which is sometimes described as a predictable way to forecast returns, and sometimes as a way to know whether this is, or is not, a good year to invest and make some money. Unfortunately, most of this reporting is nonsense. Let’s start with the predictable part. Wouldn’t it be nice if, even for just one month of the year, we could know whether the market is going to go up or down? That’s what market pundits are implying in their January Effect reporting: that markets have a strong tendency to rise in January. Why? The explanation, first offered in 1942, is twofold: » Read more..