And sell them in January to take advantage of the January effect: the predictable increase in stock prices from December to January. Many explanations have been, the most prominent being a tax-motivated sell-off in December by investors trying to realize a capital loss before the end of the year. But here is a paper that demonstrates a large and significant january effect in simple laboratory auctions. Two identical auctions were conducted, one in December and one in January and the bidding was significantly higher in January.

In the first experimental test of the January effect, we find an economically large and statistically significant effect in two very different auction environments. Further, the experiments spanned three different calendar years, with one pair of auctions conducted in December 2003 and January 2004 and another pair of auctions conducted in December 2004 and January 2005. Even after controlling for a wide variety of auxiliary effects, we find the same result. The January effect is present in laboratory auctions, and the most plausible explanation is a psychological effect that makes people willing to pay higher prices in January than in December.

Sombrero swipe: Barking Up The Wrong Tree.