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Santa Claus Rally 2023! Well folks, maybe perhaps sometimes wishes do come true. Dare I say it, the US economy seems on the approach to a soft landing after a once in a generation pandemic. Oh I can hear the naysayers now. The end is nigh, in fact it is right around the corner.
The problem with this mentality is that something is always around the corner. My whole investing career over the last 25 years has experienced some kind of tumultuous event. This just happens to be the way life goes.
Santa Claus Rally 2023 – From Investopedia:
Santa Claus Rally 2023 is the sustained increase in the stock market that occurs around the Christmas holiday on Dec. 25. Most estimate these rallies happen in the week leading up to the Christmas holiday, while others see trends that begin Christmas Day through Jan. 2.12Investopedia
Theories that explain a Santa Claus rally include end-of-year tax considerations, a general feeling of optimism and seasonal happiness on Wall Street, and investing holiday bonuses. Some institutional investors settle their books and vacation during this time of year, leaving the market to retail investors, who tend to be more bullish toward the market.
Just check out these headlines:
Santa is Real
Well, if the spirit of Santa is real and this rally is real, here are my 3 personal takeaways:
1. Never bet against the US
Yes, I love the USA. I love our country. We are far from perfect. And there are some aspects of other nations that I downright envy; subsidized healthcare at any age, less expensive education systems, etc. BUT, the fact remains that the US is a great nation with great people. We have many more challenges to overcome to create a more equitable and healthy society, but I have hope for our future.
We will probably have another brutal political silly season. But then, we will all go back to doing our jobs, building wealth, loving our families and living in a great society. Our natural resources, our geography and demography all bode well for the future of the US. We still have the rule of law and a free and open society.
I like some exposure to emerging markets, but will continue to stay mainly invested in great American companies. Warren Buffett is famous for believing this and it holds true to this day.
2. Well Constructed Portfolios Rule
Over the last couple of years we have discussed the importance of a well diversified strategic portfolio of assets. This current rally only strengthens my commitment to this long term strategy.
3. Time in Market & Manage Emotions
Once again, time in market with a diversified program seems to beat out market timing. The shorts lost so far. We could certainly see a correction in the new year, but over time as the economy grows the value of the strongest companies seems to increase and raise the broader indexes.
I want to add the importance of managing our emotions when it comes to investing. And this is about your risk tolerance levels. If you can’t take huge fluctuations, then it is probably time to re think the way your assets are diversified.
Managing emotions also means managing the highs. When things so high and good, it may be a good time to re balance or take some profits off the table. Best to keep emotions in a neutral range as much as possible when it comes to markets and investing.
Merry Christmas and Happy Holidays
All said, there is more to life than money. Money is a tool to be utilized wisely and strategically. We hope that Money Vikings brings you more clarity about money and personal finance. We appreciate you checking out and sharing our content. BEST WISHES TO YOU AND YOUR FAMILY THIS HOLIDAY SEASON FROM THE MONEY VIKINGS!