CBS in The Economist

International interest in Lepori’s research

Do solar eclipses have a psychological impact on stockbrokers? Assistant Professor Gabriele Lepori from the CBS Department of Finance has conducted a scientific study, in which he compared the 362 solar and lunar eclipses from 1928 to 2008 with American and Asian share prices during the same period of time. His research has aroused international interest and, among others, The Economist has reported on Lepori's conclusions.

Share prices fall by 0.3% on average

The study shows that share prices as well as buying and selling activities drop briefly in the days before and after an eclipse. Disregarding all other factors of influence, share prices experience a constant drop of 0.3% during the three days surrounding an eclipse. The trading volume falls by 2% in the same period. The effect was biggest, however, when the eclipse occurred on a weekday instead of over the weekend – that way share trading was affected immediately. According to Lepori, one explanation could be that even investors may be superstitious, and that psychology is an important factor in the investment industry. In many cultures, eclipses are omens of something bad, and financial thrift is a natural consequence.

Share drop only short-term

It is worth noting that the share market adjusted again few days after the eclipses. If you had consistently invested after such irrational share drops, Lepori’s calculations show that your investment would have multiplied 37 times, disregarding the transaction costs. It would have been even more lucrative to sell shares prior to the eclipses and then buy them back immediately – then the investment would have multiplied 55 times.