The Unraveling of December’s Illusion

Men prepare for Christmas as if expecting a miracle, though they rarely recall the last one. The markets do the same, clinging to traditions older than their shareholders’ memories.

The so-called “Santa Claus rally” has long been a ritual-a five-day truce between greed and despair. From 1950 to 2025, the S&P 500 (now ^GSPC +0.55%) managed to rise 78% of the time in this period, averaging 1.3% gains. It was a fragile hope, like a candle in a gale.

In 2026, the candle blew out. Not with a roar, but a sigh.

Three Years of Quiet Descent

For the first time since records began, the S&P 500 stumbled three winters in succession. In 2024, it lost 0.9%. In 2025, 0.3%. This year, 0.1%. The numbers shrink like a man’s patience in a waiting room.

This ritual, once a harbinger of spring, now whispers of winter. Historically, when the rally succeeded, the year ahead averaged 10.4% returns. When it failed, the market limped forward with 6.1%. But history is a fickle companion, offering no guarantees and fewer apologies.

Consider 2024 and 2025: both years began with losses in this ritual, yet ended with 23% and 16% gains. The market, like a sly old fox, defied expectations. Yet three consecutive failures? That is a new language-one of exhaustion, not calculation.

Some argue the S&P’s double-digit gains in those years signal resilience. Others see a delayed reckoning. The truth lies in the silence between the numbers, where investors’ hopes and fears blur into a single gray line.

We do not know what awaits. Perhaps a thaw. Perhaps a deeper freeze. But the market, indifferent as the sea, will go on. And we, like children clutching broken toys, will keep building our castles in the sand.

❄️

2026-01-09 19:22

Three Years of Quiet Descent

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