Stocks got off to a poor start this year, and, according to the so-called “January effect” (also known as the January barometer), that portends further losses in 2009. In short, the January effect suggests that if stocks are up over the first week of the year, then they will be positive for the entire year (and vice versa).

To skeptics, this bit of financial folklore seems, at best, misplaced, a case of confusing correlation with causation—perhaps not as outlandish as Punxsutawney Phil’s ability to predict the onset of spring, but close.

Research suggests that the effect works 75 percent of the time, leaving another 25 percent when it doesn’t. So 2009 has a good chance of going either way.

Recently, researchers in New Zealand reported that passive investing – investing a fixed amount at regular intervals – still outperforms an investment decision based on the January effect. And we’re inclined, at least in principle, to agree. A passive investment strategy, over the long run, tends to beat market timing. In fact, anything that can take emotion out of investing, especially in a tumultuous market like today’s, is likely to reward the patient investor. — Chris Horymski