Image source: Getty Images
Past performance is no guarantee of future returns. But new research from eToro suggests now could be a good time to recharge. FTSE 100 actions.
The Footsie is up 1% so far in December in what some say could be the start of a Santa Rally. Markets are rising on hopes of imminent interest rate cuts by the Federal Reserve, along with tax cuts under the return of President Trump.
History shows that December protests are not unusual. According to eToro, “stock market investors enjoy almost a quarter of their annual returns in December“. And UK investors in particular are benefiting most from the end-of-year fizz in financial markets.
The FTSE surpasses
Broker eToro analyzed the performance of 14 major global indices over the past 50 years. He showed that “Returns in December average 1.63%, comfortably beating the average monthly return of 0.57% from January to November.“.
Encouragingly for UK investors, the FTSE 100 has also outperformed almost all other major indices over recent festive periods.
It has obtained an average return in December of 2.29% since its formation in 1984, outperforming the other months of the year by a substantial 1.93%. On average, a whopping 36% of Footsie's annual returns were earned in the last month of the year.
The average return for December is better than the 1.28% reached in S&P 500 has provided in recent decades. Hong Kong only hang seng The index has provided a better average last month performance across all major global indices, at 3.09%.
A Top Stock I'm Considering
As I said at the beginning, past performance is not a reliable guide to the future. And right now, fears about U.S. trade tariffs, China's struggling economy and war in Europe and the Middle East pose a threat to this year's Santa Rally.
However, despite the macroeconomic and geopolitical risks, I think it is worth seriously considering investing in stocks, whether in December or any other month of the year.
This reflects the superior long-term returns that investors enjoy compared to simply holding cash. Someone buying a FTSE 100 tracking fund in 2019, for example, would have enjoyed a solid average annual return of 6.2%.
Buying specific undervalued stocks this December could provide an even better return. Phoenix Group (LSE:PHNX) is a very cheap stock that I am considering for my own portfolio.
In 2025, annual profits are expected to soar 22%. This leaves it trading on a forward price-to-earnings (P/E) ratio of 9.4 times.
Additionally, the FTSE company also has a price-to-earnings (PEG) ratio of 0.4. Any reading less than one indicates that a stock is undervalued.
Finally, the dividend yield on Phoenix shares is a market down 10.8%.
Despite the threat of high competition, profits here could soar as falling interest rates boost consumer demand. Phoenix's results should also increase as demographic changes drive pension sales, now and over the long term.
This is a stock I am considering buying for my own portfolio. I think the share price could seriously improve in December and beyond.
