You read that correctly. Believe it or not, the stock market tends to do better or worse depending on where we are in the lunar cycle.
That’s the conclusion of two studies that have circulated for a couple of years in academic circles but that, until an article in the November issue of the Harvard Business Review, received relatively little attention outside academia. The first study, “Lunar Cycle Effects in Stock Returns,” was by Ilia D. Dichev, an 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. The second study, “Are Investors Moonstruck? Lunar Phases and Stock Returns”, was 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.
Both studies agreed on a crucial point: during the 15 days of the lunar month closest to the — starting seven days before it and ending seven days after — the stock market’s average returns are much higher than those of the other half of the month.
The differences are quite large — as much as 10 percent a year, on average, depending on the stock index and the number of decades studied — and they are pervasive. The researchers found a lunar effect in all major United States stock indexes over their history, including the Dow Jones industrial average back to its start in 1896. Furthermore, after examining several dozen foreign markets, the study by Professors Dichev and Janes concluded that “if anything, the results are more pronounced for foreign countries.”
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