Black Friday came as has Cyber Monday. Black Friday gained its name due to retail stores bringing their budgets into the black due to the massive sales. This amount of spending does wonders for the books of retail stores, but what about the market overall? Since 2000 there have been only 6 years where the S&P 500 closed lower on December 31 than Black Friday’s closing. Even during the 2008 Christmas season the market closed 0.78% higher. From 2000 until 2017 the average gain in the S&P 500 ran at 1.29% gain. With only 2 of the 6 bad years occurring after the 2008 financial crisis our recent history has a decent record for growing through the end of the year. However when you continue to the month end of January following Christmas season the average return drops to 0.85%. There are 9 years, or half, in which January closed below Black Friday and 5 of those 9 happen after 2008. One possible reason is a tax sell-off or loss harvesting. This strategy is used to offset capital gains made earlier in the year so come tax time there won’t be as much to pay in taxes. Other possible reasons are global events. In 2016 China’s market took a significant hit and that echoed into our market driving the massive Black Friday-January 31st deficit of 7.18%. This gives some slightly good news for the year end considering the beating the market has taken since October, however it doesn’t lead to much of a bullish outlook come the end of January. The takeaway is that market investments shouldn’t be focused on short runs but that your portfolio goals are maintained, and you’ve built a plan that can weather even a large correction in a short time frame. Keeping the long-run in mind will help curb some of the panic that might set in due to market volatility and let you focus on what truly matters most to you.
