Debunking the January Barometer

The market's swan dive last month tells you virtually nothing about what's in store for 2009.

Standard & Poor's 500-stock index plummeted 8.6% in January, leading many prognosticators to conclude that stocks will likely continue to drop the remainder of the year. Don't count on it. After falling in January, stocks historically have tended to rise in the subsequent 11 months.

Like every myth, the so-called January barometer contains a grain of truth -- but only a grain. The stock market's performance last year provided ammunition for this barometer's fans: The S&P 500 plunged 6% in January, and the index lost 38% for the entire year.

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Steven Goldberg
Contributing Columnist,
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or