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Earth Star Up FrontFULL MOONS AND THE STOCK MARKETIf you’ve always suspected there’s a little lunacy inthe stock market, now there’s proof. It’s the fullmoon, of course, which legend says brings ondepression and pessimism,not to mention werewolves. Ifthat’s true, presumably it would alsotrigger a gloomy outlook about futurecash flows, causing investors to takefewer risks, and stock prices to fall.“We find strong lunar cycleeffects in stock returns,” sayUniversity of Michigan BusinessSchool professors Ilia D. Dichev andTroy D. Janes in a research report.“Specifically, returns in the fifteendays around new moon dates are aboutdouble the returns in the fifteen daysaround full moon dates. This pattern ofreturns is pervasive,” they report.The scholars set out to examinethe folk wisdom that moon cyclesaffect human behavior, especiallyabnormal behavior around full moons.They turned to stock markets to get abig enough sample, as millions of people make billions oftrades on a regular basis.They gathered data on major U.S. stock markets over thepast one hundred years, and on the marketsof twenty-four other nations goingback thirty years.“Taken as a whole, this evidenceis consistent with popular beliefs thatlunar cycles affect human behavior,”the researchers concluded.The Harvard Business Review,reporting the research in a recent issue,says that while these findings “are a bitoff the beaten path, they’re the productof rigorous research.”“So even though we might not beready just yet to consult lunar cycles forguidance on all our stock trades andother major decisions,” the HarvardBusiness Review says, “we should keepin mind that unexpected sources canbeget robust data and analysis, and thatcorrelation and causality must be carefullyexamined.”8 EARTH STAR APRIL / MAY 2007