The turkey week boost: Is it real and who does it impact the most?
By: Cole Achtzehn
Thanksgiving week is a massive week every year for most Americans. Aside from the food and family craziness, it is one of the most active for the stock market. Many typically associate this with anticipation for Thanksgiving, Black Friday and Cyber Monday spending but there is also the possibility that other factors can impact the market as well.
In an article on the topic, Jared Blikre of Yahoo finance writes, “According to Yahoo Finance data and calculations, the S&P 500 has ended the week green three-quarters of the time going back to 1961.”
What day of Thanksgiving week is the biggest?
The same calculations also show us a somewhat surprising revelation that Wednesday is the day that shows the best historical gains. Many might believe that Friday would hold that title but big speculation heading into a long weekend, mixed with a shorter trading day on “Black Friday” make for a perfect storm for Wednesday to be the biggest of the week.
Bilkre also notes that, “if an investor bought the S&P 500 the Friday before Thanksgiving and sold it the Friday after beginning in 1961, they’d be up 42% as of last year — a compounded annual growth rate of 6.2%, according to Yahoo Finance data.”
In an article on the topic, Jared Blikre of Yahoo finance writes, “According to Yahoo Finance data and calculations, the S&P 500 has ended the week green three-quarters of the time going back to 1961.”
What sectors flourish during Thanksgiving?
Turns out… it is not just retail that sees a boost from the turkey week surge. The biggest preforming sectors during turkey week over the last 25 years are quite variable. When averaging the Thanksgiving week median gains across the board we see all the following sectors above 1%: energy, materials, tech, consumer discretionary, and communication services.
Does this actually signal anything?
Believe it or not, yes it does. Many people often refer to the 5 to 6 week period between Turkey Day and the new year that is referred to as the “Santa Claus Rally”. Others will refer to the 3-month stretch from November to January as the best 12-week run of the year for the market. Some economists have even identified a historical trend known as the “January effect” which sees small cap stocks outperforming large caps during the December to January period.
Blikre goes on to note that there is, “a super-seasonal trade — when investors can buy the Tuesday before Thanksgiving and hold through the second trading day of the new year.
Since 1950, the S&P 500 is up nearly 80% of the time over this roughly six-week time frame — posting an average gain of 2.57%.”
Being prepared is the best plan
These trends tend to bring a lot of optimism, but just because there are trends that can be noted, it does not mean things will play out exactly the same way this year. It is important to have your financial plans in place to ensure you are ready for whatever comes your way over the next 4 to 6 weeks.
The good news? Our team is ready and willing to serve you in any of those endeavors. Schedule a meeting with us today and tackle the Turkey Day boost head on and make the most of it no matter what!
