January 2009 v January 2008 on the S&P500

A few weeks ago as the market rip roared to start the new year... because as you know when the calender changes from '2008' to '2009' all fundamental issues disappear.... CNBC was breathlessly telling us the "5 day" rule. You know - that if the first 5 days of a year are good, then the whole year will be great! I just love rules like this. (not) Such abstract nonsense. But if it has a 54% success rate - it must be paraded on financial media.

Now, that group has shut up.

The next rule (which has a higher probability) is "as January goes, so goes the year". I still think any of these blanket statements are nonsense but January 2008 was (from my memory - don't quote me) the worst January at least post World War 2 (if not longer). And we know how 2008 turned out (-37% on S&P)

Now if CNBC and the punditry were intellectually honest, they'd drag out those same "soothsayers" who told us 3 weeks ago how the first few days (when the market was screaming up) were foretelling a great 2009 - and have them tell us how bad 2009 will be since the month of January is shaping up to be a disaster. But never fear - they won't do that.

Let's compare how we are doing thus far

2008 S&P 500 in January: -6.1% (that seems quaint considering the carnage of Sep-Nov 2008, but a -6% month would annualize to 72% loss)
2009 S&P 500 Month to Date: -8.5% (don't ask what that annualizes to)

Please note at it's worst January 2008 actually fell 10.8% from the Dec 31, 2007 close (Jan 22nd in fact) I remember, because I jumped in the market 1 week too early (removing my hedges and going heavy on the long side) and got my head ripped off for a week - until the real bounce came later in the month. Which is essentially why I am sitting on my hands now - I prefer my head attached and am willing to miss out on the "imminent rally" - don't want to repeat the Jan 2008 mistake. I'd like to be more bullish at S&P 750ish but this 820 level is stubborn. A magnet.

Anyhow let's review: as goes January, so goes the year.... but only when it's convenient to mention it (i.e. when the market is up for the month of January)

Toodles.