New Year’s Fireworks


The time around Christmas and New Year is believed to be particularly lucrative in the stock market. We have looked closely at what is myth and what is fact.

While the kids can hardly wait for Santa's arrival, investors are looking forward to the Christmas and New Year’s rally. However, there is one problem - there no longer is a New Year’s rally.

From 1983 to 2005 January has been by far the best month on the Oslo Stock Exchange. However, during the past ten years the January effect has been absent and the month has provided a negative return on average.

This shift warns that seasonal effects are not infallible. A more fundamental problem with the financial markets is that they continually mutate and become increasingly efficient.

When a market inefficiency becomes widely known and harvested on a large scale, it tends to disappear.

Fading out?

The missing New Year’s rally over the last decade may be a warning that seasonal effects on the stock market are fading out.

However, our studies show that December is still a good month. During the last ten years December has been the second best month, only beaten by April. In other words, even though the New Year rally has gone, it seems that the Christmas rally is still present.

We have performed extensive statistical analysis to see if there are any other seasonal effects on the Oslo Stock exchange. We have also been looking for tax-related effects, such as loser stocks being artificially pushed down in December due to tax-motivated sales.

We have found evidence of tax-related effects in December and January. However, they are so small that they are less interesting from an investor standpoint.

Increased risk appetite

On the other hand, we have identified significant upswing in risk appetite in the time around New Year. In December, this is reflected through an increase of demand for volatility. This is shown by the fact that high-beta shares yield a significant outperformance.

In January however the desire for liquidity risk increases. This is reflected by a sharp outperformance in the smaller companies.


At this time of year it is common to publish the so-called New Year's rocket Portfolios. Judging by the results of our studies, such a portfolio should consist of high-beta shares in December.

Of the fifty shares included in the main index on the Oslo Stock Exchange, the following have a particularly high beta: Seadrill, DETNOR, PGS, Thin Film and Aker Solutions. This is our rocket portfolio for December.

However, small caps should be considered in January. If you stick to the OSEBX companies, you should go for Weifa, Photocure, Q-Free, Nordic Nano Vector and Biotec.

In the Dovre portfolio we make a bet that the risk appetite will increase, and we add three of the New Year’s rockets: Aker Solutions, PGS and Thin Film.


  • Panoro Energy
  • Det norske oljeselskap
  • REC
  • Aker Solutions
  • PGS
  • Thin Film

In: Aker Solutions, PGS, Thin Film

Out: Veidekke, Tomra, Marine Harvest