Definition of January Effect
What is the January Effect
The January effect is a theory that suggests stocks and other assets will increase in value during the month of January so if an investor buys on the first trading day of January, the expectation is that they should be profitable on the last trading day of January. While in recent years, this theory has not been an accurate indicator for stock prices, it has had a better track record with bond prices.
Glossary of Terms and Phrases
A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.
We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.