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MILLBURN, N.J. ( TheStreet) -- With the first month of the year well behind us, it's time to tackle the market proverb: "As January goes, so does the rest of the year."

The theory behind this maxim is that the market's performance in January will be indicative of the remainder of the year. In other words, if the market increases in January, then the rest of the year will also trade positively. On the other hand, if the market falls in January, then the rest of the year will also bring market declines.

So in the spirit of one of my favorite shows, Mythbusters, the Finance Professor will attempt to prove or bust this market saying.

As always, I start with my data base of returns for the S&P 500 (SPX) going back to 1950. For each of those years, I calculated the returns for January, the rest of the year (February through December), and the full year. To tie in the data with my recent article on how to trade the midterm elections, I've color-coded the election cycle years (blue: midterm election year; green: year before a presidential election; red: presidential election year; yellow: year following a presidential election). The table of returns is presented below:

In total, there are 60 years of returns. Here are my observations:

1. In 44 of the 60 years (73% of the time), the SPX rose for the full year. Thus, in 16 of those years (27% of the time), the SPX declined.

2. In 37 out of the 60 years, (62% of the time), the SPX rose for the month of January. That left 23 years (38% of the time) in which January was negative.

3. In 45 out of the 60 years (75% of the time), the SPX rose for the rest of the year, and in 15 years (25% of the time), the SPX declined the rest of the year.

4. In 44 of the 60 years (73% of the time), the direction of the SPX return in January was the same as the direction of the return for the rest of the year. Of those 44 occurrences, on 33 occasions a positive January was followed by a positive rest of year. The other 11 occurrences were negative Januaries, which resulted in negative performance the rest of the year.

5. In 12 of the 16 years in which the direction of January was the opposite of the direction for the rest of the year, January was lower and the rest of the year was higher. The most recent example of that occurrence was 2009. On only 4 occasions was January higher and the rest of the year lower, the most recent year being 2003.

6. January 2010 is already in the books as a negative year, so let's look at how the market did the rest of the year after declining in January. For all 23 negative Januaries, the rest of the year rose 12 times and declined 11 times. The average performance for the rest of those 23 years was -0.79%. When the SPX rose for the rest of the year after falling in January, the average return the rest of the year was 11.37%. When the SPX declined the rest of the year after falling in January, the average return the rest of the year was -14.05%.

7. Looking solely at the midterm election years, coded in green, we get some other interesting data. First, recall that January tends to be a down month for the midterm election year. According to my data, those midterm Januaries declined by 0.63% on average. However, the rest of the year increases by an average of 6.42%.

8. In 7 out of the 15 midterm Januaries (47% of the time), the SPX declined with an average return of -4.11%. In only three of those years was there a decline for the rest of the year. Note that January 2010 declined by 3.70%.

So what does this all tell us? First, the proverbial "As January goes, so does the rest of the year" may be more anecdotal than factual. Furthermore, the saying may be more relevant to positive Januaries than negative Januaries. Of 37 higher Januaries, 33 were followed by a positive rest of the year. However, negative Januaries have much less correlation with returns for the rest of the year. In fact, especially for midterm Januaries, a decline in the first month has ften led to higher prices the rest of the year.

Thus, in the parlance of Mythbusters' Jamie and Adam, the January market proverb is in part busted and in part plausible.

-- Written by Scott Rothbort in Millburn, N.J.

At the time of publication, Rothbort had no positions in stocks mentioned, although positions can change at any time.

Scott Rothbort has over 25 years of experience in the financial services industry. He is the Founder and President of LakeView Asset Management, a registered investment advisor specializing in customized separate account management for high net worth individuals. In addition, he is the founder of TheFinanceProfessor.com, an educational social networking site; and, publisher of The LakeView Restaurant & Food Chain Report. Rothbort is also a Term Professor of Finance at Seton Hall University's Stillman School of Business, where he teaches courses in finance and economics. He is the Chief Market Strategist for The Stillman School of Business and the co-supervisor of the Center for Securities Trading and Analysis.

Mr. Rothbort is a regular contributor to TheStreet.com's RealMoney Silver website and has frequently appeared as a professional guest on Bloomberg Radio, Bloomberg Television, Fox Business Network, CNBC Television, TheStreet.com TV and local television. As an expert in the field of derivatives and exchange-traded funds (ETFs), he frequently speaks at industry conferences. He is an ETF advisory board member for the Information Management Network, a global organizer of institutional finance and investment conferences. In addition, he is widely quoted in interviews in the printed press and on the internet.

Mr. Rothbort founded LakeView Asset Management in 2002. Prior to that, since 1991, he worked at Merrill Lynch, where he held a wide variety of senior-level management positions, including Business Director for the Global Equity Derivative Department, Global Director for Equity Swaps Trading and Risk Management, and Director for secured funding and collateral management for the Global Capital Markets Group and Corporate Treasury. Prior to working at Merrill Lynch, within the financial services industry, he worked for County Nat West Securities and Morgan Stanley, where he had international assignments in Tokyo, Hong Kong and London. He began his career working at Price Waterhouse from 1982 to 1984.

Mr. Rothbort received an M.B.A., majoring in Finance and International Business from the Stern School of Business, New York University, in 1992, and a B.Sc. in Economics, majoring in Accounting, from the Wharton School of Business, University of Pennsylvania, in 1982. He is also a graduate of the prestigious Stuyvesant High School in New York City. Mr. Rothbort is married to Layni Horowitz Rothbort, a real estate attorney, and together they have five children.