Moonstruck: The lunar cycle's effects on financial markets
Growing evidence suggests financial markets are influenced by changes in the lunar cycle. In fact, two widely cited university research studies concluded in favor of this theory after examining the correlation of moon phases and financial markets.
Lunar Cycle Effects in Stock Returns, by Ilia D. Dichev, associate professor of accounting at the University of Michigan, and Troy D. Janes, an assistant accounting professor at the State University of New York at Buffalo and Are Investors Moonstruck? Lunar Phases and Stock Returns, by Lu Zheng, an assistant finance professor at the University of California, Irvine; Kathy Yuan, an assistant finance professor at Michigan, and Qiaoqiao Zhu, a graduate student there agree that during the 15 days of the lunar cycle closest to the new moon—seven days before and ending seven days after—the stock market’s average returns are significantly higher than those during the other half of the month.
How does 10% more profit sound?
On average, depending the stock index and the number of decades studied, the difference in total return during the new moon phase is as high as 10% a year. This holds true for all major United States stock indexes over their history, including the Dow Jones industrial average. However, the authors caution that while markets perform better on average around new moons than full moons, and during waxing moons than waning moons, the levels of relative outperformance are small compared to market variability and external factors making trading these differences very risky. Consult with a qualified investment advisor before launching your moon phase portfolio.
Because the moon isn’t always easily visible, it can be difficult to identify its positioning throughout the lunar cycle. AcuRite Weather Stations track the phases of the moon conveyed through simple lunar phase icons.
So go ahead. Plan your portfolio with confidence!
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