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For any investor interested in searching, there are market theories and terms built around just about any event, season, philosophy or holiday. The Efficient Market Hypothesis says stock prices inherently incorporate all known information. Sell in May and Go Away is another popular idea as is the January Barometer and January Effect which uses the first month of the year to forecast the other 11 months.


Santa Claus Rally

Then there are market theories built around Christmas. The first is the Santa Claus Rally built around the jolly elf of Dutch origin who promotes world peace by delivering gifts worldwide Dec. 25.

For investors, Santa’s gift is a price jump in stocks, known as the Santa Claus rally. The rally occurs between Christmas and New Year’s Day and there are several theories about why the rally takes place. Perhaps it has to do with year-end tax considerations. Or the fact market pessimists are on Christmas vacation. It could also be due to people buying stock in anticipation of the January effect mentioned above.

Boston Snow Indicator

This market indicator suggests that a white Christmas (thank you, Irving Berlin) in Boston will cause stock prices to climb. Like the skirt-length indicator and the hot waitress economic index, both of which tie totally “non-market” factors to the economy, the Boston snow indicator has no real basis in fact.

Perhaps this helps explain its nickname, “The BS Indicator.” On the other hand, if you are prone to believe short skirts indicate good times ahead or that the more attractive waitresses are in general, the worse off the economy is becoming, the Boston snow indicator might be a good investing strategy for you.

Wall Street Elves

While not exactly a market theory, the investing world does have technical analysts known informally as Wall Street Elves. Wall Street Elves, who were once guests on the PBS show “Wall Street Week,” now off the air, try to predict the direction of the market.

Referring to these analysts as “Elves” apparently imbues them with the same mystical power Santa’s elves have in making toys for an entire planet’s worth of good little boys and girls. In theory, Wall Street Elves provide direction to “good” investors to help them make money to buy toys for their children.


Evergreen Funding

Christmas trees are fir trees known as evergreens. They may have originated in Roman times when citizens were said to cut down a fir tree to keep in their house to appease the goddess Ceres. In the 1500s, German (O Tanenbaum) became the first country to associate evergreens with Christianity and Martin Luther is said to have set up the first Christmas tree lit with candles.

On the investing side of the ledger, the term “evergreen” refers – in the UK – to the gradual infusion of capital into a new or recapitalized enterprise. Evergreen funding is forever green (just like the tree) and constantly replenished. Across the pond, in America, an evergreen loan is one that is constantly renewed until the company or individual has the funds to repay.

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