As we move into December, many traders and investors are considering what this month might hold for local stocks. While the past year has been marked by geopolitical tensions, inflation, and high interest rates, there's a glimmer of optimism as December trends suggest a positive outlook for the JSE Top40. This festive period has historically rewarded investors with consistent returns, making December an intriguing time to be in the market. So, what can we expect for December 2024? Let's dive into the trends and historical performance to see what might be in store. I know past performance is no indicator of future performance, and the world is a lot different than it was even a year ago. This year, particularly, investors and traders have had to digest geopolitical conflict, near run-away inflation and high interest rates.
On the positive side, elections both at home and in the US have allowed for some optimism to creep back into markets.
As mentioned, the last 6 years have, more often than not, produced good returns on the JSE Top40 looking back at the data.
December performance
December 2018 | +4.63% |
December 2019 | +3.51% |
December 2020 | +3.83% |
December 2021 | +4.67% |
December 2022 | -2.35% |
December 2023 | +1.22% |
December 2024 | ? |
With December returns rewarding investors with gains five out of six years over the festive period, it may just be worth the gamble to follow the trend. We don’t know what December 2024 holds, but looking at the history, the real risk lies in NOT being in the market.
Without going into a deep dive into what sectors outperformed, the illustration is simply that if one purely held the index, you would have enjoyed healthy returns every Christmas since 2018.
Consideration.
It is important to note that December trading volumes are usually considerably lower. This means we have fewer market participants driving stock prices. This can be an advantageous time for investors and traders alike and could be a reason that the festive season trading period provides such a window of opportunity.
Looking at the historical data, the trend of positive December returns seems to suggest that being in the market could be a profitable strategy, even in a year marked by uncertainty. However, it's essential to remember that lower trading volumes during this period present both risks and opportunities. To stay ahead of market movements and capitalise on the festive season’s potential, visit Unum Capital's website for more insights, expert analysis, and strategies to guide your investment decisions in December.
Here’s to profitable trading,
Robby P
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