It's January, so that means more of the January indicator myth

Every January, without fail, the financial press haul out their stock articles about the January indicator*, update a few numbers and voila! another article done for the month. The WSJ ran a piece about this "bellwether indicator". As expected, journalists got it wrong and only promoted the often quoted myth. If the WSJ can be lazy enough to post the same old tired article, I can take a few sentences to point out again why this particular bit of Wall St. lore is wrong.

As January goes, so goes the year

That's an old, old Wall Street adage. So old, in fact, that I couldn't even track down its origins. What the maxim means is that the direction of January foretells the stock market's direction for the rest of the year (February through December) that is. Financial journalists love to pull this one out every year, particularly since a little quick math is impressive. In the 82 full years since and including 1926, this metric has worked 70% of the time. Considering markets are either up or down, 70% is much better than the coin flip odds would suggest. Or is it?