The January Effect

The January effect is the tendency for stocks to do well in January, especially small caps. Yesterday, we saw the small caps outperform as it seems people are starting to front run the January effect. I saw numerous articles on what small cap stocks to buy to take advantage of the January effect.

Its a tricky situation to play these things when everybody knows about it. Small cap underperformance in the past few months and further equity issuance in the large cap space would give small caps a leg up. I am starting to do some work on small cap stocks but am still unsure if I will ultimately pull the trigger.

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