As Americans watch the moon pass between earth and the sun to create a solar eclipse, some investors may be wondering how stocks perform following these rare events.
“Fortunately, when a total solar eclipse has been seen in the U.S. since 1900, equity prices are up 17.2% a year later,” LPL Financial’s Ryan Detrick observed. “So it appears our biggest worry isn’t what stocks might do, but whether those glasses we bought online are officially approved by NASA!”
Detrick reviewed the past 15 times a solar eclipse has been visible from the US. On average, 1-month, 3-month, 6-month, and 12-month returns have been positive.
There really is very little to no economical basis for what the stock market does — all things being equal — during and after a solar eclipse. Some parts of the economy, like some power grids, may be affected. Beyond that, the decision to trade solar eclipses seems to be largely about superstition.
As for Detrick’s observation that stocks usually rise after eclipses, that’s actually just the nature of the stock market. It spends more time going up than down.
“[G]ains are very common historically,” Detrick tweeted.
“Should you ever invest based on the solar system?” he asked. “Absolutely not, as things like fundamentals, valuations, and technicals are still what will drive markets.”
Sam Ro is managing editor at Yahoo Finance.
- Investors feel crummy about how expensive they’ve made stocks
- Why markets aren’t panicking about North Korea
- Wall St. says ‘Goldilocks’ will fuel stocks for years
- The stock market has been in a new price regime for 20 years
- Why the end of a bull market can be a nightmare for bears
- Warren Buffett: One metric tells me the most about the future