Actualis



June 2007
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Asking the moon for help with your investments

Recently, a serious business publication, the Harvard Business Review, reported that the moon may have an influence on stock prices.
Is it simply a rumour or is it true?

In its November 2006 edition, the Harvard Business Review published the results of a rather surprising study undertaken by two Michigan University researchers, Ilia Dichev and Troy Janes.

The two researchers studied the returns of the past 30 years on no less than 25 of the world’s stock markets. The conclusions they reached would make many astrologists quite happy. Indeed, there seems to be a very definite correlation between stock prices and the lunar cycles. According to the study, when the moon is new, returns are generally much higher (up to 10%) than they are during the rest of the year. On the other hand, the full moon, that is, the end of the lunar cycle, is associated with significantly lower returns.


Source: Ilia D. Dichev and Troy D. Janes, Lunar Cycle Effects in Stock Returns, quoted in: Harvard Business Review, November 2006.

The researchers mention other studies that found a marked correlation between the lunar cycles and the behaviour of a large part of the population. The full moon is often associated with a pessimistic mood and a sombre outlook for the future. Dichev and Janes advance the hypothesis that, on the stock market, such a state of mind would likely translate into a negative financial outlook and a more risk-adverse attitude.

Though such studies are the product of rigorous research, they should still be taken with a grain of salt. But, they do remind us that, where investments are concerned, we shouldn’t rely on our emotions to make decisions… especially if they are inspired by the moon!



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