Resumen de The 'other' January effect and the presidential election cycle

Ray R. Sturn

• The 'other' January effect posits that when January's stock returns are positive (negative), the remaining 11 months of the year tend to be positive (negative) as well. While no explanation is currently offered, this departure from market efficiency carries important implications for the portfolio management decision. Other research has shown that stock returns tend to be higher during the second half of the president's term than during the first half as a result of variations in fiscal policy across time. When the 'other' January effect is examined in the presence of the presidential election cycle, it seems clear that January holds greater predictive power during certain years of the president's term in office. Therefore, in portfolio management decisions, investors should not view either in isolation, but consider both together.