Claim check: The January effect
“January is the best month for stocks.”
What the data says
Does not hold Not supported by the data: January returned +1.4% a month on average against +1.2% for the other months in S&P 500 (n = 16 months, 2010-01-04 to 2026-11-10; t = 0.2, likely noise; rank 5 of 12 by average return). The direction points the claimed way, but the result cannot be told apart from chance.
No effect we can tell from chance, or the opposite effect.
Who says it
Sidney Wachtel (1942) documented small-cap January strength; 'As January goes, so goes the year' from Stock Trader's Almanac.
Origins are as commonly cited and were not independently verified.
How we tested it
Month-end to month-end returns for SPY. January is compared with the other eleven months (Welch t-stat), must rank in the top three of the twelve calendar months by average return, and must be positive in both halves of the history.
Results
| Market | Observations | Mean | Rest | Difference | Up share | t-stat | Rank of 12 | Reading |
|---|---|---|---|---|---|---|---|---|
| S&P 500 | 16 | +1.4% | +1.2% | +0.16% | 62% | 0.2 (likely noise) | 5 | Right way, likely noise |
Average monthly return by calendar month (S&P 500)
Stability across the two halves of history
A saying that only works in one half of the history is not much of a rule. Each row shows the effect in the full history, the first half and the second half; green means the claimed effect was present.
| Market | Full history | First half | Second half |
|---|---|---|---|
| S&P 500 | +0.2% | -0.9% (7) | +1.0% (9) |
Context and cross-checks
Shown for context; not part of the verdict.
Other markets (context, not part of the verdict)
| Market | Observations | Mean | Rest | Difference | Up share | t-stat | Rank of 12 | Reading |
|---|---|---|---|---|---|---|---|---|
| Gold | 16 | +3.5% | +0.5% | +3.06% | 69% | 2.3 | 1 | Clear and stable |
| Silver | 16 | +3.8% | +0.7% | +3.15% | 69% | 1.6 (likely noise) | 1 | Right way, likely noise |
| Commodities | 16 | +1.4% | +0.3% | +1.12% | 69% | 0.9 (likely noise) | 3 | Right way, likely noise |
| Agriculture | 16 | +0.5% | +0.1% | +0.33% | 69% | 0.4 (likely noise) | 6 | Right way, likely noise |
| EUR/USD | 16 | 0.0% | -0.1% | +0.09% | 56% | 0.1 (likely noise) | 6 | Right way, likely noise |
| Bitcoin | 12 | -1.2% | +6.3% | -7.41% | 50% | -1.1 (likely noise) | 12 | Too little data |
| Ether | 9 | +14.7% | +4.0% | +10.69% | 56% | 0.9 (likely noise) | 3 | Too little data |
Average monthly return by calendar month (Gold)
The honest caveat
The classic effect is a small-cap effect; we only have large-cap and broad ETFs.
Descriptive statistics from historical data, before costs. Not a forecast and not investment advice.
Questions
January is the best month for stocks.
Not supported by the data: January returned +1.4% a month on average against +1.2% for the other months in S&P 500 (n = 16 months, 2010-01-04 to 2026-11-10; t = 0.2, likely noise; rank 5 of 12 by average return). The direction points the claimed way, but the result cannot be told apart from chance.
How was this claim tested?
Month-end to month-end returns for SPY. January is compared with the other eleven months (Welch t-stat), must rank in the top three of the twelve calendar months by average return, and must be positive in both halves of the history.
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Markets used
S&P 500 · Gold · Silver · Commodities · Agriculture · EUR/USD · Bitcoin · Ether