At this time of year, some investors and commentators can get a bit giddy with what is commonly known to investors as the "January effect" - and they do have an argument.

Whether you put it down to science or superstition, the fact is since 1970 the sharemarket's All Ordinaries Index has returned an average 11.2 per cent between December 1 and May 31, compared with 2.5 per cent between June 1 and November 30.

Shane Oliver, AMP Capital's head of investment strategy, says this effect means it is generally good to invest between November to May, as that's when the market puts in its best returns.

"I wouldn't recommend that investors solely trade on the back of seasonal factors, but it is certainly an indicator worth looking at," he says.

The reason for the January effect has long been debated among traders, but no definitive answer has been found.

Many think it is due to tax-selling in the United States, the world's largest market, which has a flow-on effect around the globe.

The tax sell-off to realise capital losses kicks off with the US mutual funds in October and continues until the end of the tax year in December, as other institutional and retail investors crystallise their losses.

Of course, much of this money needs to be reinvested, so after a slight dip in the market, funds come rushing back, driving prices higher once again.

Likewise, many large corporations pay big contributions to their staffs' pension fund at year end, which is usually invested in January.

Add to this the Christmas bonuses that are often invested in the market come January, and a clear argument starts to emerge for the reason the market picks up early each year.

"Seasonal patterns are useful in timing moves into and out of the market," Oliver says. "If you want to allocate money into the market now is not a bad time to do it, but I would think twice about putting a lot of money in around May.

"Likewise, if you are thinking of taking money out, then October and September are probably not a good time to do it."

Much as the environment can affect seasonal climate patterns, changes in the financial environment can also effect the sharemarket's seasonal differences.

"People do tend to sell out of their trading positions [at this time of year] because there is no momentum, so there may be some opportunities around," says Marcus Padley, a Tolhurst Noall share broker and publisher of the daily newsletter Marcus Today. "But to generalise too much is to offer a level of comfort that could change in a day".

Padley and CMC market analyst David Land say any "January effect" could easily be negated by the flood of super money shoring up share prices at a time when the market is regularly breaking historic highs. It is, and will remain, a stock-pickers market, they say.

"I am generally wary of putting fixed rules on what the market will do because historically it has a habit of surprising us," Land says.

He argues that growing awareness of the January effect has pulled forward buying and selling in anticipation of the end of the US tax year.

"I would be happier seeing people making their buying and selling decisions based on company fundamentals rather than the anticipation of a strong buy up following tax selling in the US," Land says.

Oliver says that while investors should note the seasonal patterns, they are not guaranteed and do not replace the knowledge and research needed to make a good investment decision.