The January effect is a hypothesized market anomaly where stock prices, particularly small-cap stocks, tend to rise in January more than in other months. This effect is often attributed to various factors, including year-end tax-loss harvesting (selling losing stocks in December to realize capital losses for tax purposes and then repurchasing them in January), bonus payments, and increased investor optimism at the start of a new year. However, the existence and strength of the January effect have been debated among financial researchers, with some studies suggesting it has diminished or disappeared over time due to increased market efficiency and investor awareness.