Tis the season

It's that time of year. Time for Home Alone. Time for Bailey's. Time for endless Slade. Time for the stock market to rally?

Every year as we approach year end, a strange phenomenon occurs in the stock market known as the "Santa Rally." This is one of the many "Calendar Effects" that are observable during the year. It would seem that in December, stocks ostensibly get a boost out of nowhere. Analysts have attributed it to things such as increased spending or bonus money flooding into the market. Personally I think it has more to do with investors feeling more optimistic around the holiday season and becoming more speculative in their judgement.

How to mitigate this bias?

Focus on the fundamentals and be data driven. If you feel yourself getting whipped into the frenzy of markets this time of the year and throwing caution to the wind, go back to the original investment thesis for your position, check the numbers and take a pause. Let time be your friend and build in a "cooling off" (no pun intended) period into your decision making framework.

Tis the season to be jolly. Do it armed with some tips on avoiding expensive behavioral mistakes.