The January Effect.

2008 was the third worst year on record for the Dow and S & P index. What will 2009 bring? God knows, thats why I say fall back on the January effect because what we have seen the governments of the world do in the last 12 months may not show their effects for years to come.

Historically, the first year of a President's new term is a down year for the Dow and S & P, however, the year following the two worst years in history were both up significantly. So we are at a stale mate and all we are left with is the January effect to break the tie.

The January effect argues that the first 5 days of trading will dictate the outcome for the year (for the most part). Of the 119 years of the Dow existing, 76 of those years the Dow was net up on the first five days, a rate of about 64% of the time. 54 of those 76 times the Dow finished up for the year, a rate of 72%, though not a certainty, a strong indication of likelihood of repeating. Thus, when we were down the other 43 times, 21 times the market finished down for the year, about 48% of the time.

Therefore, when the Americans are printing money like never before and we have a derivatives and equity market which no one can make heads or tails of. In a world of so called experts and so called hedge funds down 40% for the year (I guess they were just hedge funds in name alone), I say fall on the January effect. Statistically speaking it beats the crap out of any letter writer or PM's track record, and with the historical success of the years following the previous two worst years, and thus, I think we end up higher for the year, if we end up higher after the first 5 days in January.

Good luck and may all your dart throws be four baggers.