Is a December Rally Likely? Searching for Alpha for December 2011

December 2nd, 2011
in contributors

by Ben Warwick, Aspen Partners,

cross post from Searching for Alpha Blog Newsletter, Advisor One

It’s hard to believe that stocks were down over 7% at one point last month. But Wednesday’s coordinated central bank intervention—and on the last day of the month, no less—enabled equities to end the month with only modest losses.

Such attempts to prop up the market can’t go on forever, of course, but they underscore the will of the Western world to avoid a recession at any cost. But it won’t have to, as a December rally is all but assured amidst bullish seasonal factors and the mindset that Europe won’t implode until after the New Year at the earliest.

Follow up:

I mentioned a few reasons to favor stocks heading into year-end in last month’s Searching for Alpha newsletter. These included robust earnings and hedge funds desperate to make some cash, to name a few.

But the most important reason to believe in a Santa Claus rally is simply because we need one—and the central banks of the world can simply will a rally into existence if traders need a nudge.

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MacroTides November Letter: Slipping Toward Recession in Europe by MacroTides

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About the Author

Ben Warwick, Aspen PartnersVeteran investment strategist Ben Warwick brings 20 years of investment management expertise to in his blog, Searching for Alpha. His market and economic insights provide readers with an insider’s view on generating alpha through asset allocation, the use of strategic portfolio “tilts,” and alternative investments. Blog history is available here.

Warwick is co-chief investment officer of Aspen Partners, LTD, an alternative investments specialist based in Atlanta, Denver, and New York, and CIO of Quantitative Equity Strategies, LLC. He is the author of several books, including Searching for Alpha: The Quest for Exceptional Investment Performance, (Wiley, 2000); The Handbook of Managed Futures, with Carl Peters, (McGraw-Hill, 1996); and The Worldly Investor Guide to Beating the Market: Beat the Pros at Their Own Game, (Wiley, 2001). He can be reached at

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