Tuesday, December 7, 2021

Santa Claus Rally & Holiday Huddle



Ask The CFP® Practitioner

Darcie Guerin

“Oh, Christmas isn’t just a day, it’s a frame of mind . . .”
~ A Miracle on 34th Street

What does the term Santa Claus Rally mean?

b17-cbn-12-23-16-2The Santa Claus Rally is a catchy phrase and it is cheery to think that even Wall Street receives a visit from Old Saint Nick. Many investors believe that Santa Claus visits Wall Street in the form of higher stock prices. Reasons for the seasonal rally could be overall optimism, happiness and euphoria, investors putting year-end bonuses to work in the market or increased consumer sales spreading good will from Main Street to Wall Street.

Yale Hirsch is the market analyst who came up with the term in 1972. He defined a Santa Claus Rally as an up market during the last five trading days of the current year spilling forward to the first two trading days of the New Year. Although statisticians can’t say with precision if December is different than the rest of the year, the performance is sometimes used as an indication of how the market may do during the next year.

According to the Stock Trader’s Almanac, the so-called rally has occurred 18 times out of the past 22 years. The four times that the Santa Claus Rally didn’t take place was a precursor to the flat years of 1994 and 2004, and the memorable down markets of 2000 and 2008.

This year, there’s more attention than usual placed on this phenomenon because we’re coming off the “Trump Bump,” the post-election market upturn. An old Wall Street adage is“if Santa Claus should fail to call, bears may come to Broad and Wall,” referring to the New York Stock Exchange’s location.

While you’re contemplating the validity of the Santa Claus Rally, it’s an opportune time to share this concept with your family and hold a holiday huddle, a short meeting to talk about your financial planning process. Don’t worry, you don’t need to get into specifics while the family is gathered for the holiday season. Just introduce the subject and let family know you’re taking care of your future. This may be one of the greatest gifts you can give this holiday season.

As many of you may know, one of the main reasons I chose to become a financial advisor is that my Dad never had the chance to share his plans with his family. One Friday, he asked me to lunch to review specific changes he was going to make to his financial plan. The plan was to discuss the essence of those revisions with the entire family at Sunday dinner. That never happened because he died Friday night. The changes were never made, feelings were hurt and his intentions weren’t carried out. Although I knew what he wanted to do, there were no legal documents in place to support his wishes.

This is why I’m such a strong proponent of having these discussions sooner than later, and making sure your legal documents are in place. Taking these steps is a meaningful way to pay it forward and bring order to a potentially chaotic and stressful time.

Who you include in your holiday huddle is up to you.

For some, it’s only immediate family. For others, it includes spouses and grown children. You may want to have a one-on-one conversation with certain family members beforehand to discuss any specifics and your reasoning for some decisions. Having a mental outline or a formal agenda keeps things on track and helps avoid surprises.

Our family doesn’t make a huge deal of these huddles; it’s more of an opportunity to reassure each other that we’ve taken responsibility for our well-being into the future.

It’s important to keep the conversation going on a regular basis as changes occur in everyone’s lives with births, deaths, divorces or other major life events that take place. If you’re the type who finds these discussions uncomfortable and awkward, pause to think about how difficult and painful it would be for those you love the most to unravel your affairs while they’re grieving your absence. Family financial planning huddles can help prevent problems long before they start and you can control the conversation. Openly discussing important matters can actually bring your family closer. The holidays are a good time to hold a discussion since everyone is already gathered together and in a good frame of mind to receive this profound, generational gift.

As our grandchildren get a bit older, they start to ask if Santa is real. Our standard answer to this question is, “If you believe, you will receive. Seeing isn’t believing, believing is seeing.”

Although it remains to be seen if a Santa Claus Rally will be our gift from Wall Street this year, you can give the gift of a holiday huddle to those closest to you. Remember to keep a long-term view of the market and concentrate on the big-picture of what’s most important to you and yours. Stay focused and plan accordingly. Merry Christmas, happy holidays and a very Happy New Year!

There is no assurance that any investment strategy will be successful. Investing involves risk including the possible loss of capital. The opinions expressed are those of the writer, but not necessarily those of Raymond James and Associates, and subject to change at any time.

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041; email darcie.guerin@raymondjames.com. Website: www.raymondjames.com/Darcie

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