First trading day of December

As explained in the 2014 edition of the Almanac, the market has a tendency to be strong on the FTD of a month. And this effect has been even more pronounced in recent years.

Since 1984, the FTSE 100 Index has fallen on average 0.01% on the December FTD – it is the only month of the year with a negative average return on the FTD.

Since 2000, the performance has been a little stronger on the December FTD, but it is still one of the weakest month FTDs in the year.

The following chart shows the returns for every December FTD since 1984.

FTSE 100 First Trading Day for December (1984-2012)

 

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Shares that like/dislike December

Shares that like December

The following table lists the five FTSE 350 shares that have the best returns in December over the last ten years. For example, William Hill has an average return of 5.5% for the month of December. Each stock has risen in every December in the past ten years.

Company TIDM Avg(%)
William Hill 5.5
Balfour Beatty 5.4
JPMorgan Emerging Markets Inv Trust 5.2
Witan Investment Trust 4.8
Alliance Trust 3.8

Shares that dislike December

The following table lists the three FTSE 350 shares that have the worst returns in December over the last ten years. For example, Centamin has an average return of -3.7% for the month of December. All three stocks have fallen in seven of the past ten years in December.

Company TIDM Avg(%)
Centamin -3.7
Rank Group (The) -3.7
Amlin -1.5

An equally-weighted portfolio of the above strong December stocks would have out-performed every year an equally-weighted portfolio of the above weak December stocks by an average of 7.9 percentage points in December for the past ten years.

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These stocks still don’t like December

A previous post noted that seven stocks had fallen in at least eight of the past ten Decembers (up to 2011). The following chart shows the peformance of these stocks for December 2012.

Thorntons bucked the trend by rising strongly in December (the stock had been strong most of the year). But an equally-weighted portfolio of the seven December-phobic stocks would still have under-performed the FTSE All Share by 15 percentage points.

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The UK market in December – average chart

The following chart plots the average performance of the FTSE 100 Index during December since 1984 (more info on this type of chart).

Historically, December has been the strongest month in the year for the market. As can be seen in the chart, the market climbs steadily throughout the month, accelerating slightly from the middle of the month.

US election years

The following chart shows the average performance of the market in December in US presidential election years.

Unlike November, there is no great difference between the average market in December for US election years and all other years.

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General retailers start their weakest month of the year

The 2013 edition of the Almanac looks at the historic monthly performance of the FTSE 350 sectors. Here we look at the general retailers sector.

The following chart plots the average out-performance of the FTSE 350 general retailers sector over the FTSE 100 Index by month since 1999. For example, since 1999 on average the general retailers sector has out-performed the FTSE Index by 1.7 percentage points in February.

Observations:

  1. The strongest month of the year for the sector is February, and the weakest is December.
  2. After two strong months early in the year (February and March) the relative performance of the sector steadily declines for the rest of the year.

The 20 stocks in the FTSE 350 General Retailers sector [NMX5370] are-

Brown (N) Group  [BWNG] Kingfisher  [KGF]
Carpetright  [CPR] Marks & Spencer  [MKS]
Debenhams  [DEB] Moneysupermarket  [MONY]
Dignity [DTY] Next  [NXT]
Dixons Retail  [DXNS] Ocado  [OCDO]
Dunelm  [DNLM] Paypoint  [PAY]
Halfords  [HFD] Sports Direct  [SPD]
Home Retail  [HOME] SuperGroup  [SGP]
Inchcape  [INCH] TUI Travel  [TT.]
JD Sports  [JD.] WH Smith  [SMWH]
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Shares that don’t like December

The 2013 edition of the Almanac lists the 21 companies that have risen nine times or more in the last ten years in the month of December – the shares that like December.

Below is a table of the the seven stocks that dislike December – each stock has fallen in at least 8 of the past 10 Decembers – with their average returns for all Decembers since 2002.

Company Avg (%)
CML Microsystems -5.04
HMV Group -7.03
Quarto Group (The) Inc -4.71
Rank Group (The) -4.42
SkyePharma -3.53
Thorntons -6.31
Wincanton -4.81

A portfolio of these seven stocks would have under-performed the FTSE All Share Index in every December since 2002 with an average under-performance of 7.4% each December.

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First trading day of December

Next Monday (3 December) will be the first trading day (FTD) of December.

As explained in the 2013 edition of the Almanac, the market has a tendency to be strong on the FTD of a month. And this effect has been even more pronounced in recent years.

The weakest month FTD is December – the only month where the market has fallen more often than risen on the FTD since 1984. This is somewhat surprising as December is, as a whole, the strongest month in the year for the market.

Since 1984 the average return on the December FTD has been -0.02%, and the market has risen in 46% of years.

The following chart shows the returns for every December FTD since 1984.

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