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Regarding the January Effect, Do you think the Demand and Supply model adequately characterizes the market’s...

Regarding the January Effect, Do you think the Demand and Supply model adequately characterizes the market’s behavior?

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The January Effect is referred to as seasonal increase in stock prices during the month of January . A drop in stock prices typically occurs in December because investors engage in tax-loss harvesting to offset extracted capital gains . This sudden drop in stock prices initiate the increase in demand for stocks which ultimately leads to higher prices in January . So this can be depicted by a supply and demand model where the demand for stocks shift rightwards causing the January Effect .

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