Volatility: It's what's for dinner

Volatility - Large Pic

The VXX is up 18% in the last 5 days. Will Volatility make a big comeback in 2013?

Overall,  instruments such as the VXX were a sucker's bet in 2012. Savvy investors know that you're not supposed to hold VXX for an extended period of time.

However, for those not-so-savvy investors out there, holding VXX for all of 2012 would have resulted in an 80% loss.

The January Effect and Taxmageddon

Investors are accustomed to a general increase in stock prices during the month of January. This rally is generally attributed to an increase in buying, which follows the drop in price that typically happens in December when investors, seeking to create tax losses to offset capital gains, prompt a sell-off.

2012 had a great January effect. In spite of that, 2013 has a lot of uncertainty surrounding Taxmageddon.

Taxmageddon is a one-year $494 billion tax increase slated to strike the economy on January 1, 2013, if a deal is not made

Here we are on December 27th and there is no deal in sight as the deadline nears.

Ask yourself this - will there be a January effect in 2013 if Americans incur a nearly $500 Billion tax increase?