Date:January 15, 2015Source:Case Western Reserve UniversitySummary:Weather changes may affect how institutional investors decide on stock plays, according to a new study by a team of finance researchers. Their findings suggest sunny skies put professional investors more in a mood to buy, while cloudy conditions tend to discourage stock purchases.Weather changes may affect how institutional investors decide on stock plays, according to a new study. Their findings suggest sunny skies put professional investors more in a mood to buy, while cloudy conditions tend to discourage stock purchases.
The researchers conclude that cloudier days increase the perception that individual stocks and the Dow Jones Industrials are overpriced, increasing the inclination for institutions to sell.
The research paper, "Weather-Induced Mood, Institutional Investors, and Stock Returns," has been published in the January 2015 issue of The Review of Financial Studies. The research was collaborated by Case Western Reserve University's Dasol Kim and three other finance professors (William Goetzmann of Yale University, Alok Kumar of University of Miami and Qin Wang of University of Michigan-Dearborn).
Institutional investors represent large organizations, such as banks, mutual funds, labor union funds and finance or insurance companies that make substantial investments in stocks. Kim said the results of the study are surprising, given that professional investors are well regarded for their financial sophistication....MOREPossibly related:
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Snow has shut down Heathrow Airport in London. It’s become a roach motel. No one gets in, no one gets out. Snow has also shut down “The City” too. The lower volume holiday markets already were here. This snow has made it tougher for everyone to get to work in London. Meanwhile, the weather hasn’t been outstanding in NYC or Chicago. Volumes are light.
This week is a holiday shortened week. I would expect the trends of the year to continue. Bull markets in commodities and in stocks should continue. Keep in your back pocket that on the last trading day of the year, the funds will buy to paint the tape. Then on the first trading day of January, they buy again as fresh cash gets put to work. There is data this week, but action should be muted.
Weather is not given enough credit for its influence on markets. Weather affects business tremendously....