For those of you unfamiliar with the issue and how the internet works (in simple terms) each and every connected device on the internet needs an IP address. It’s like a phone number, basically a unique number given to your computer, mobile phone, or whatever, whenever it is connected to the internet. It then “dials” another number whenever you check your email, go to a web page or any other activity.
Of course, to dial a number you need a number your self. And as we all know the number of connected devices on the internet is by no means slowing down. So we need more numbers to allocate to these devices. But here’s the catch: There are no more numbers available.
So as it’s still a rather fresh 2011, and January so far is looking a little mixed, I thought it would be fun to do a deep dive into a calender effect called the January Barometer. Many people seem to confuse this with the January Effect, but they are different things.
The January barometer states that the direction (of the S&P 500 at least) during January can be viewed as an indicator for the following 11 months. So in other words, if the S&P 500 ends up this January, that would be an indication of a good coming year overall and vice versa.
There’s no specific reasoning given for why it should be like this. One could theorize that there might be some form of structural break as we enter a new year with new budgets and everything. So say the general economy was heading up, then more would be invested, starting in January and then continuing.
But why just theorize? There’s easily available data we could download and look at. And that’s just what I did.