IS THERE A WALL STREET SANTA?

This is kind of a hidden truth it’s a historical piece of information that many people along Wall Street don’t tell youabout. But is there a Wall Street Santa? The answer is “yes”.  There is and what is that Wall Street Santa called call “The Santa Claus Rally”

When is this Santa Claus Rally?

And the Santa Claus rally starts Monday here on planet Earth.  That’s right.  The Santa Claus rally starts Monday here on planet Earth.  And what is the Santa Claus rally?  The Santa Claus rally is a one–time “end–of–year” distribution on what is called “capital gains”. And it is a global reinvestment eventwhich the computers go in and just buy more shares from the capital gain distributions.  It is a form of program trading because no individual is buying the shares it’s done automatically by the program that you’re in.

What is this Santa Claus Rally? 

Let’s talk more about what this Santa Claus rally really is and some of the background information so here in the United States Dividends are paid out every quarter.  But in other countries sometimes dividends are paid out once a year.  Now, there are many programs and many people who have their accounts.  Their investment account may be set up on dividendreinvestment.  It’s a very common thing especially if you have retirement accounts.  

Capital gains are paid out one time a year and they’re paid it at year end.  How this is done is that many Mutual Fundcompanies will have their fiscal year in and September 30th.  And then that gives them the month of October and the month of November to compute all the capital gains.  

Starting on the 15th of December mutual fund companies will pay out on different days.  For example, Fidelity, Blackrock, American Funds and others will pay out at different days after December the 15th on separate days, like the 16th, another one on December the 17th December the 18th and so on. 

Let Me Explain…

As you can see it occurs at the last two weeks of the year. And because it occurs around Christmas and Santa Claus is associated with Christmas it’s called “The Santa Claus Rally”. Now, in some years ”The Santa Claus Rally” is more muted than other years and let me explain.

Some years if you don’t have a lot of gains during the year then the mutual funds may not pay out a lot of capital gains.  As a result, “The Santa Claus Rally” will be more muted. Now, understand that the term rally Santa Claus rally is the term we use for the entire event that happens in the last two weeks of the capital gain distribution time.  But it doesn’t necessarily mean that the Market’s going to Rally.

However, historically speaking when you have a year where you had great gains then typically the rally is bigger.  It makes sense when you think about it because there’s going to be more capital gains distribution paid out.  We believe that this is going to be a very strong Santa Claus rally.

November, historically, is a good month. December is a good month overall except for the first two weeks which is unpredictable.

This year the trading has been very strong with over $142 billion and new assets new money coming into the equity markets.

Cantu Tactical Wealth Management and Joe Cantu would like to wish everybody a Merry Christmas and happy holidays.  

DISCLOSURES

This video and blog is for educational reasons only. Joe Cantu isChief Investment Officer for Cantu Tactical WealthManagement is your host and has over 30 years of experience in the retirement money management profession he is a West Point graduate with a Master in Business Administration and has worked for three of the largest Wall Street firms as a stock broker and portfolio manager over 15 years ago he created Cantu Tactical Wealth Management which actively balances and selects Investments based on a tactical approach rather than the traditional Strategic Management method of the “Buy and Hold” philosophy. He believes in the pursuit of finding Investments showing momentum performance, regardless of the direction of the market. Joe’s experience includes IRA accounts, 401K rollovers, trusts, endowments, defined benefit plans, 403b’s and 401K plans. Additionally, he served as a night College instructor for seniors teaching “High Net Worth Retirement in Estate Planning” for 14 years.

Podcast, Blog and YouTube video views and personal opinions are for educational and entertainment purposes only and does not constitute a recommendation. Investing has risk of loss and you should consult with your own advisers for any financial decisions. 

Cantu Tactical Wealth Management and Joe Cantu are a fiduciary firm and registered investment advisor in the states of California Florida Georgia and Texas providing pure independent advice and money management.