Thursday, December 06, 2007

Stocks rise when sun shines | Dallas Morning News | News for Dallas, Texas | Business

We've talked about this several times in class so when I stumbled upon this in the Dallas Morning News (it is orignally from the Washington Post) I figured I better share it!

Stocks rise when sun shines | Dallas Morning News | News for Dallas, Texas | Business:
"In a study of 26 stock markets around the world between 1982 and 1997, researchers David Hirshleifer and Tyler Shumway showed that the annualized average return on perfectly sunny days was 25 percent, while the annualized average return on overcast days was only 9 percent."
" Mark J. Kamstra, a finance professor at York University in Toronto, argued that seasonal variations in the markets might be related to seasonal affective disorder."
and finally:
"Given the transaction costs of buying and selling stocks, Dr. Hirshleifer said, it's impractical to use sunshine as a stable investment strategy.

But an investor who's planning to sell some stocks anyway might want to time the sale to a sunny day of the week instead of a cloudy day.

"The main lesson for investors is something broader," Dr. Hirshleifer said. "It is important to discount for your moods in making investment decisions.""

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