Can the moon really boost your investment returns?

According to some people, the movement of the moon affects the way markets behave. And that can be used to time your trades. But does the theory bear scrutiny? Merryn Somerset Webb investigates.

A new lunar cycle began at the weekend. You might think this is totally irrelevant, but perhaps not.

There has long been an idea knocking around that the movement of the moon affects the way stock markets behave. There have even been a couple of reasonably influential studies done on the subject.

A few years ago, the Harvard Business Review attracted some attention by noting that the results of both of these studies suggested that during the seven days before a new moon and the seven days after a new moon, average stock market returns are higher than at other times. And not just in the US (the most studied of markets), but all over the world.

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Sounds like crazy talk doesn't it? But some perfectly sensible-seeming fund managers set some store by it. Many cultures already assume that the lunar cycle affects behaviour (which is not to say they are correct).

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There has been some biological research into the issue, too. The suggestion is that our levels of serotonin rise and fall as the moon moves (lower when the moon is new, higher when it is full) and that our mood and hence attitude towards the market changes as they do so.

Still, whatever the cause might or might not be, a new piece of research entered the fray recently. The technical analysis team at RBS looked at the performance of six different stock market indices the FTSE 100, the S&P 500, the Dax, the EuroStoxx 50, the Hang Seng and the CAC40 in relation to the lunar cycle. Their findings? On their numbers, it does make a difference.

Take the FTSE 100: the average daily change since 1986 has been 0.5522 points or 0.02%, according to RBS. On a new-moon day, it has been rather higher at 5.17 points or 0.11% and, on a full-moon day, it has been higher still, at 6.42 points or 0.13%. So about ten times higher than average for both.

That's reasonably interesting in itself, but not as interesting as the next bit. The RBS team then looked at what happened if you traded just twice a month: on the day of a new moon (or the next trading day if the new moon falls on a weekend) and on the day of the full moon (or next trading day).


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If you had started with £1,000 and bought on the new moon and sold on the full moon consistently since 1984, you'd now have £12,116 making a nice profit of £11,116. If you'd bought on the full moon and sold on the new moon, you'd have ended up with a mere £2,036. And, if you'd just bought and held, you'd have found some kind of middle way with £5,130.

Things get better still when you look at the S&P 500 from 1928 to 2010. If you'd put £1,000 in and left it, you'd have £63,846. That would be nice. But not as nice as if you'd followed the "proposed moon trading strategy": that would, they say, have given you £1,502,689.

This might simply be the start of the silly season and be more a correlation than a causation. But, if you think it might be worth more time, visit, for the dates of all new and full moons.

However, as you do so, remember that even if there is something here, this is long-term stuff: previous studies found that while, on average, lunar trades came good, they only did so 60% of the time.

So, even if all the research is valid, you will still lose 40% of the time. There are a great many forces (banking crises, sovereign defaults and the like) that are much stronger than the odd serotonin hit.

Studies like this also tend to overlook the nasty matter of transaction fees and index fund management fees, both of which will cut back on any returns you might make, given that lunar trading clearly means frequent trading.

So what might override this week's serotonin surge?

Maybe houses. There are increasing reports of a pull back in the Chinese property market, the US property market is stalled again and in the UK two sets of numbers out recently underline the fact that we appear to be entering a house price double dip. Halifax reported a fall of 0.6% in prices in June, making the six-month rolling annualised movement in house prices -3%. Then, the Acadametrics House Price Index backed up the news by reporting a 0.5% fall in the same month.

It seems, says GFC Economics Graham Turner, that the 16% fall in mortgage approvals in the six months to May is "taking its toll".

The stock market isn't particularly expensive at the moment and it is possible to make a good bullish case should you want to. But this crisis began in the housing market and, until falling property prices and the deflationary fears they bring are dealt with, I can't see myself having the confidence to bet particularly positively on anything not even the moon.

This article was first published in the Financial Times

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.