December boasts the highest frequency of positive returns of any month, with shares rising 74% of the time, a higher rate than at any other time.
We have found compelling evidence to support the idea of a 'Santa Rally', said Jason Hollands, managing director at Bestinvest.
Explanations as to why stock markets tend to do well in December include fund managers positioning for the year ahead, investing spare cash to 'window dress' portfolios.
Another explanation is that hedge funds close out negative bets, requiring them to repurchase shares they previously borrowed off other investors.
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