The `January Effect': It Ain't What It Used To Be

In the past, investors have made quick profits on small stocks by playing an annual phenomenon known as the January Effect. This rapid rise in small-cap prices during the first two weeks of the year typically follows two end-of-year events: Investors sell shares to balance gains with losses for tax purposes, and investment managers unload lesser-known stocks and underperformers to dress up their portfolios for yearend review. Then the New Year comes, and investors rush back into these small-cap stocks.

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