While most Americans are gearing up to eat some turkey, watch the Macy's Thanksgiving parade, and find the best Black Friday discounts, many investors will still be eyeing the market. Luckily for them, the stock market has surprisingly given decent returns if they decided to invest during the week of Thanksgiving.
Yahoo Finance Reporter Jared Blikre joins the Live show to break down the numbers and show how historically investing in the market during this holiday can garner some returns sweeter than cranberry sauce.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
JARED BLIKRE: Tomorrow, the best day historically, that would be Wednesday of the Thanksgiving week. And here I have it mapped out. The S&P 500, the NASDAQ, Russell 2000. And then each day, Monday through Wednesday, and then Friday as well. We skip Thursday. And then pink we have the whole week. And the S&P 500 is up about 6, 7/10 of a percent going back to 1961. And you can see the Russell 2000 actually does the best for the entire week.
And I just want to show you, if you would've invested only in Thanksgiving weeks since 1961, through the present day, you would be up 42%. So if you invested $1,000, you would have $420 in profits over that time period. Monday is-- it's been kind of a loser historically. That would be down 5%, but the others would be up. And Wednesday looking the best, up 19%.
And then drilling down into some of the sectors, energy is actually the number one going back to 1999, up about 1 and 1/2%. And these others are up more than 1% as well on average, or actually on median I should say. That's materials, tech, consumer discretionary and communication services. Then we have some of the laggards here: consumer staples, industrials, real estate, healthcare, utilities, financials. All of those are just up minuscule amounts.
But just thinking about the seasonality trade, we have a lot of bullish seasonality into the end of the year. We have something called the January effect. We have-- that's where small caps outperform in January but that actually starts in mid-December. We have the Santa Claus effect. And then also November, December, January, that is the best three-month time of the year to be in the market on average or in median going back at least 50 years.
So you put it all together, there is a trade where you enter the Tuesday before Thanksgiving, that would be today, by the close and then you sell on the second trading day after the new year at the close of the day. That is up a whopping 80% of the time, posting gains of 2.57% going back to about the 1950s. So lots of bullish seasonality around.
I do have something complementary. This is my VIX fear gauge seasonality January through December. And you can see this cyan line, which drops, drops, drops. That is what it usually does. And so far, we have pretty much played out as expected. So lots of bullishness into the new year. Of course, anything can happen. I always have to add that caveat, but maybe just enjoy this for what it's worth.