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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Dave Kahn who wrote (2663)	1/1/1999 6:42:00 PM
From: marc ultra	Read Replies (1) \| Respond to of 15132

Re:January effect. I can't remember all the theory behind it at the moment so maybe someone can fill in the the details but the basic idea is the small caps in the past have tended to rally and outperform in January. I think some of it is related to the end of tax selling where a lot of the smaller less established companies will get beaten down more than larger companies. Also since mutual funds in general need to sell by October 31 to take a tax loss and cut down distributions, in recent years the January effect may be seen earlier than January and in fact in recent years I think it's often been missing altogether. With the small caps coming off a dismal period and thus battered with even more tax selling than usual and at arguably very good valuations compared to big caps this would seem like as good a year to see small caps taking off as any now that tax selling is over so theoretically they should do great in January and we may have seen the start of this in December. The giant caveat is small caps seem to have found a way to disappoint for years despite rosy expectations making a lot of money manager's predictions on CNBC etc. look more ridiculous year after year which is why Bob basically said he'll believe it when the money starts flowing consistently in earnest Marc