What is a Santa Claus Rally?

What is a Santa Claus Rally?

A Santa Claus Rally is a rise in stock prices in the month of December, generally seen over the final week of trading prior to the new year. The rally is generally attributed to anticipation of the January effect, an injection of additional funds into the market, and to additional trades which must, for accounting and tax reasons, be completed by the end of the year.

It also can be attributed to fund manager performance window dressing to show gains to investors to maintain clients and receive performance fees.

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