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Why the January Effect Exists and How Investors Can Capitalize On It

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Returns in the stock market historically have buoyed investors’ portfolios in January, producing an average gain of 5% for nearly five decades.

The market has outperformed in January from 1963 to 2010, and the average return for the broad market index was over 5% compared to other months which produced returns of 1%, according to research conducted by Scott Beyer of the University of Wisconsin-Oshkosh, Luis Garcia-Feijoo of Florida Atlantic University and Gerry Jensen of Northern Illinois University.