By Tony Samson
ECONOMISTS refer to the optimism that a new year brings as the “January Effect,” specifically relevant to the stock market which is traditionally given a boost in price and volumes on the first month of the new year. It is considered temporary and more behavioral than rational in its bullish mood.
There was already the profit taking or value enhancing necessary for the accountants’ closing of the books for the just ended calendar year aimed to make the numbers look better (or at least not much worse) than the previous period. Then are declared the new year’s challenges to meet, the fresh fields to plow, and new trends to test. Most of them are seen as opportunities for growth. The cash from profit taking on the last trading day is again ready to be redeployed in January 2019. (There, you have to get used to writing that new number.)
Even if January is not really a new beginning but just a continuation of time, the artificial divide of using a new calendar seems to be more than symbolic. In the digital format of your phone, it’s just another new day.
Many issues that have been deferred in the last month now need to be taken up and resolved — after the holiday break. So the feeling of a new start is fleeting and more psychological than real. Old problems linger and the new month does not really start from zero but some other big number, sometimes negative, that has been staring a CEO in the face. The new year is not a new document that offers the blank page, waiting to be written on with a fresh start.
It is not just markets that are affected by the January Effect. Social relationships too offer the illusion that the new year is a fresh starting line, even when unresolved issues of fiscal irresponsibility, thoughtlessness, forgotten birthdays, and unnecessary debates continue. That’s why couples sometimes make joint New Year’s resolutions — I will show my appreciation for your culinary skills with yelps of unmitigated pleasure, like a scene from the movie When Harry Met Sally. (I’ll have what she’s eating.)
Since there is no quarterly review of these yearly promises like the budget process in a corporation, commitments are sometimes forgotten — the pasta is a bit soggy and the carbonara sauce again too salty. There is no variance analysis acceptable to justify why something has fallen short of expectations.
The January Effect provides a sense of rebooting life. It provides a surge of energy, perhaps even a feeling of hopefulness that maybe this new year, contrary to the historical evidence of other years, will somehow be an improvement on the past. The fireworks on New Year’s Eve are probably meant to build a noisy firewall between one year and the next, exorcising the negatives of the past year.
You now seldom see the old cliche representation of the old man exiting the scene wearing the sash of the old year (how did he get so ancient-looking in 365 days?) and the baby, of course, with a horn to toot, walking forth bravely as the personification of optimism of the new year. Maybe, this metaphor of the old and the new so ubiquitous in the old giveaway wall calendars beloved by bakeries and department stores has been rendered obsolete. Even the desk diaries of insurance companies and banks that replaced them are themselves being phased out by golf umbrellas or simple greetings sent by email. Appointments are now all recorded on the phone.
January is named after the Roman deity Janus with his two faces joined back-to-back, one looking backwards and the other one forward. This original symbol of the first month alludes to its significance as a time to reflect on the past as well as plan for the future. Still, there persists the illusion of a fresh beginning, especially in taking care, when writing out checks to pay for all that shopping and exuberant celebrating the month before, to jot down the correct year.
The new year is truly a continuation of life with new twists and turns, much like a teleserye, with happy endings only for some characters, as new ones are added and removed. In real life, however, there are no commercial breaks, and not that much drama.
A.R. Samson is chairman and CEO, TOUCH xda.