Bulls prefer sunny days

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The Independent Online

Forget brokers' circulars, statistical analysis and chart watching. If you want to know whether the market is going up, look out of the window.

Research by the Fisher College of Business at Ohio State University has discovered a discernible link between sunny weather and rises in stock market values.

The study looked at stock market returns at 26 stock exchanges around the world, comparing the figures with weather conditions on particular days.

Researchers found a 0.088 per cent difference in market returns between a sunny day and a completely overcast day.

It may not sound like much, but on an annualised basis the figures amount to a return of 8.7 per cent for cloudy days, compared to a 24.8 per cent return for sunny days – an excess return of 16.1 per cent.

The team studied weather conditions between 6am and 4pm for every trading day between 1982 and 1997 across all the cities – which included Manilla, Kuala Lumpur, London, and New York.

But David Hirshleifer of the Fischer College of Business, who conducted the survey with Tyler Shumway of the University of Michigan, gave a word of warning to anyone looking to use the figures to make their millions.

"People should be careful. Strategies that involve daily trading based on weather tend to have high transaction costs and these would obliterate the gains from a weather-based trading strategy," he said.

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