Watch Out: A Bad January Doesn’t Bode Well

Dan Arnal of ABC’s Business Unit chimes in from New York:

The first month of 2009 ended with the Dow at 8000, down 8.84 percent for the month. We’ve had worse months recently (see October’s miserable performance), but this particular red arrow month is worrying some of the folks on Wall Street more than a sour October.

Why? In the Dow’s entire 112-year history, January has accurately predicted the year’s direction 75 percent of the time. So a big loss in January is a bad portent for the year in investing.

It gets even worse. In the past 30-years, the Dow’s January performance has been an even greater predictor, matching 26 years, or 87 percent of the time.

AS with everything on Wall Street, it comes with a big disclaimer: PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.

Let’s hope so.