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The January Effect and Other Market Anomalies That Actually Work

Beginner Investing • 6 min

For decades, small-cap stocks displayed a curious trend: big returns show up in January, more than any other month. This is called the "January effect," and it’s one of several market anomalies. These are real, statistically observed patterns that don't align neatly with the idea of perfectly efficient markets.The most common explanation is simple. Investors sell losing small-cap stocks in December for tax-loss…

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