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What Is the January Effect?

By Sam Swenson, CFA, CPA – Updated Oct 8, 2024 at 10:21AM

Key Points

  • January Effect suggests stocks rise in January, potentially from tax-related selling in December.
  • Small-cap stocks typically outperform large-caps in early January due to this effect.
  • Investors should focus on long-term goals rather than timing markets for short-term gains.
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