chapter 9
Predictive powers
Imagine having a system that is able to predict, with uncanny accuracy, how stock markets will perform over the course of the year. Incredibly, academics Michael Cooper, John McConnell and Alexai Ovtchinnikov have done just that.
January’s predictive powers
In their paper, ‘The other January effect’ (2006), they detail their analysis of the performance of the US equity market for the period 1940–2003. Their aim was to find out whether or not there was a relationship between how the market performed in January and its subsequent performance over the rest of the year. The results of the study were quite a revelation.
Cooper, McConnell and Ovtchinnikov found that, when the S&P 500 Index rose in the month of January, ...
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