Superstitions, Solar Eclipses And Stockmarkets-00-3282

By Author: massimo dau
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It"s no secret that investment decisions are often driven by emotions. For many people, superstitions also play a big role.

A new study by Gabriele Lepori of the Copenhagen Business School found a correlation between solar or lunar eclipses and dips in stockmarket levels.

His study looked at the dates and times of 362 solar and lunar eclipses which had been visible anywhere in the world between 1928 and 2008. He then matched these events to four US stock market indices - the Dow Jones Industrial Average, S&P 500, New York Stock Exchange Composite, and Dow Jones Composite Average.

This comparison found that on the three days around the date of the eclipse, three out of four of these indices produced lower than average returns. The variance was tiny - around a seventeenth of one percentage point - but it was apparent.

When eclipses took place on a weekday when stockmarkets were open, the effect was larger than when the eclipse occurred over the course of a weekend. There was also a correlation between the magnitude of the eclipse and the size of the impact on returns.

He also discovered a ...
... quick recovery in the days following an eclipse.

Whilst here at Informed Choice we would never recommend an investor try and time the market (many studies have shown this to be a flawed strategy) it seems that eclipses may present an opportunity.

By selling just before an eclipse and buying straight after, an investor in the Dow Jones Industrial Average since 1928 could have multipled their money by 55 times, rather than the 37 times return they would have received by keeping their money invested throughout.

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