Do they know it's Christmas time at all?

We all recognise the tell tale signs of Christmas arriving.

  • Mariah on the radio.
     
  • Mince pies appearing at every opportunity.
     
  • Christmas markets springing up in every city.

But what about the other Christmas market? And what exactly is this thing people call a Santa Rally?

You may have seen the headlines:

  • “Santa Rally hopes lift markets”
     
  • “Festive optimism builds toward year end”
     
  • “Could Santa deliver one last gift for investors?”

So what is the Santa Rally?

The Santa Rally is a term used to describe a pattern that has sometimes appeared in financial markets during the final five trading days of December and the first two trading days of January, where markets have shown positive returns over that short period.

This idea was first identified many years ago by market researchers looking at long term seasonal patterns. It is not a rule, and it does not happen every year, but it has appeared often enough to become part of market folklore.

From a technical perspective, there are a few commonly cited reasons why this pattern has appeared at times.

December often sees lower trading volumes as institutional investors reduce activity ahead of year end. When fewer participants are trading, relatively small shifts in buying or selling can have a larger impact on prices.

There is also an element of portfolio positioning. 

Some professional investors adjust holdings ahead of year end reporting, while others position portfolios for the year ahead once uncertainty around budgets, interest rates or policy decisions begins to clear.

Finally, sentiment can play a role. As the year draws to a close, investors often reflect on progress made and look ahead with renewed optimism, which can influence behaviour in the short term.

For those who enjoy a bit of context, the chart below shows historical monthly returns of the FTSE All Share, which represents companies listed on the London Stock Exchange.

Green areas represent positive monthly returns, while red areas show negative returns.

What the chart highlights is that December has often been a positive month, but not every year and never guaranteed.

  • 1 Step 1

    It's Beginning to Look a Lot like... Long Term Thinking

    Where the focus really belongs

    The important point is not whether markets rise this December.

    Short term seasonal patterns, even when they appear in historical data, are never reliable enough to base long term decisions on.

    At Pension Pulse, we focus on the longer journey with you and your investments. We consider market trends carefully, and our investment committee meets regularly to review opportunities and risks as conditions change.

    Because markets can fall as well as rise, we believe it is important to have a team on your side, managing your money in a way that is appropriate for you as an individual, rather than reacting to short term market movements.

  • 2 Step 2

    All I Want For Christmas is... A Steady Hand

    Not a crystal ball

    At Pension Pulse, we see December as a useful confidence checkpoint.

    Not a time to chase headlines or make snap decisions, but a time to pause and ask sensible questions:

    • Am I still on track?
       
    • Does my pension strategy still suit my life?
       
    • Is my level of risk still appropriate?

    Seasonal optimism can be a positive thing, especially when it is anchored to structure, perspective and professional oversight.

    That is exactly what we are here for.

  • 3 Step 3

    It’s the Most Wonderful Time of the Year… for Advice to Show Its Value

    December often brings:

    • Lower trading volumes
       
    • End of year portfolio adjustments
       
    • A flood of commentary and opinion
       
    • People checking their pension values over the holidays

    None of this is unusual.
    None of it needs rushed reactions.

    What matters is having a plan already in place and someone calmly monitoring it.

    Good advice does not get louder when headlines do.

    It gets steadier.

  • 4 Step 4

    Silent Night, Steady Adviser

    Even when markets get noisy

    Your pension does not need excitement.

    It needs time, consistency, sensible risk and ongoing oversight.

    Most importantly, it needs an adviser who does not wobble when sentiment shifts.

    At Pension Pulse, our role is to:

    • Keep your strategy steady when headlines change
       
    • Make sure you are positioned to benefit when markets rise
       
    • Ensure risk remains appropriate as life evolves
       
    • Provide clarity and reassurance when noise increases

    That steadiness is where long term value is built.

Last Christmas, I Gave You... Confidence.

Let’s look at a few familiar situations.

Paul, age 41, checks his pension in December and has questions.

Without advice, Paul scrolls through headlines about Santa Rallies and year end market moves. He wonders whether he should pause contributions until things feel clearer, or whether he should make a change to his investments based on what he has read. Nothing feels urgent, but nothing feels certain either. Paul is anxious.

With Pension Pulse, a quick conversation confirms that his contributions and risk level are appropriate for his long term goals. Nothing needs changing. Paul enjoys Christmas without worrying about the markets.

Susan, age 56, reviews her pension as retirement approaches.

Without advice, Susan feels tempted to react to year end optimism by adjusting her investments, hoping to give her pension a final boost. She is unsure whether the level of risk she is taking still makes sense, but does not want to miss out if markets rise. She makes a change which leads to financial loss entering into 2026.

With Pension Pulse, her plan is reviewed carefully in the context of her retirement timescale and income needs. Any changes are measured and deliberate, not driven by seasonal sentiment. Confidence replaces second guessing.

David, age 48, has a pension strategy that is monitored throughout the year.

Without advice, David checks his pension occasionally, often prompted by market headlines. December volatility leaves him uncertain whether he should be doing something, even though nothing in his personal circumstances has changed.

With Pension Pulse, David knows his plan is being monitored year round. December comes and goes. Markets do what they do. David remains confident because his strategy does not rely on seasonal guesses.

Fairytale of New York… and Real World Planning

Markets have never moved in straight lines.

What has remained consistent is that long term, diversified investing has historically rewarded patience, particularly when supported by good advice.

  • Staying invested matters more than timing.
     
  • Participation matters more than prediction.
     
  • Confidence matters more than reacting.

Here Comes Pension Pulse

No reindeer. Just reassurance.

At Pension Pulse, we do not promise Christmas miracles.

We do:

  • Build pension strategies designed for decades, not seasons
     
  • Monitor portfolios through all market conditions
     
  • Keep plans aligned as life changes
     
  • Help clients benefit from growth whenever it appears
     
  • Provide perspective when headlines get louder

A better Christmas Question

Instead of asking,
“Will there be a Santa Rally?" 

A more useful question is:
“Do I have the right plan, and the right adviser, in place for the long term?”

That is the question that really matters.

At Pension Pulse, we help clients approach markets with confidence.

  • By designing pensions that do not rely on seasonal trends.
     
  • By monitoring portfolios year round.
     
  • By explaining what is happening in plain English.
     
  • By keeping decisions calm, considered and appropriate.

Because good advice does not wobble with the weather.

We wish you and your family a very Happy Christmas, and we look forward to continuing our partnership with you in the New Year.

IMPORTANT INFORMATION

This article is for information only and does not constitute personal financial advice.

Past performance is not a reliable indicator of future results.
The value of investments can fall as well as rise, and you may get back less than you invest.

Tax treatment depends on individual circumstances and UK legislation, which may change.

If you are unsure whether a pension or investment strategy is right for you, please seek regulated financial advice.

As we settle into Christmas, are the markets showing seasonal cheer? By Pension Pulse Important: Pension Pulse Ltd is authorised and regulated by the Financial Conduct Authority (FRN 1029743).