Investors can often be divided into two camps. There are those who like charting identifying and following trends and others who swear by fundamental analysis careful screening to identify mispriced securities. Then there are a few (MoneyWeek's own James Ferguson, editor of Model Investor, for example) who think that a clever combination of the two is the way to go. However, there is also a small group of people convinced there is another route to riches via the stars. Yes, it turns out that some of the world's best investors turn to astrology to help them figure out what's going on in the markets.
Astrological charting: the investors who look to the skies
It is tempting to dismiss this as the nonsensical clutching at straws of underperforming managers, but that, says Sharlene Goff in the FT, could be a mistake. Goff recently interviewed Henry Weingarten, manager of the New York-based Astrologers Fund. Weingarten claims to be only one of many fund managers and investment banks that use astrology "as one of their tools".
His own fund uses astrological charting to predict the performance of currencies, indices and other assets, such as commodities, and to advise others "on everything from when to initiate a takeover to where they should position their offices". His techniques have, he says, helped him to predict last year's stockmarket correction to within a day, the current oil-price rally to within $2 and the timing of the current US housing slowdown. Weingarten describes his technique as "mathematical psychology based on astronomy". However, it boils down to charting with a twist: the manager looks at all the same variables as everyone else, but adds in astrology to help him get the timing right too. That said, even if you accept that it has possibilities, investing with astrology isn't easy to get right it takes many years of practice and is based on "a compound of planetary cycles".
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At the highest level, the financial astrologer spends time "analysing how the planets were aligned during past market cycles in the hope of picking up correlations with current and future cycles". Neptune is associated with "illusions, delusions and falsehood", according to financial astrologer Robert Gover, so a strong Neptune can signal market confusion. A prominent Jupiter, on the other hand, indicates upward market movements, whereas Saturn suggests the opposite. Any planet in "a certain astrological position can provide a burst of energy, which can have a major effect if other conditions are right", says Weingarten. Anyone who has noted China's recent lunar eclipse and looked at it in relation to China's "horoscope" (a comparison of how the planets were aligned at China's "birth date" and other present or future dates) should have been able to forecast the Chinese market's recent weakness.
Astrological charting: what the stars are telling us now
So what are the stars telling their watchers now? Both Gover and Weingarten highlight the "Saturn/Neptune opposition" (relative to the earth, the two planets are 180 degrees apart). Weingarten explains that "we are in the midst of transition, so even though the stockmarkets are going up, they could fall out of bed at any time".
Robert Gover's recent report on the subject is more apocalyptic, claiming the years 2008 to 2019 will be "the most horrendous so far in US history". A prominent Saturn, it seems, is good for construction, while Neptune has a habit of destroying weak systems; put these two in opposition and you get potentially cataclysmic results. Sceptical? Note, says Gover, that both the bursting of the South Sea bubble in 1720 and the Great Depression of the 1930s coincided with Saturn/Neptune oppositions. This interplanetary alignment occurs on a 76.6-year cycle (a fact first observed centuries ago by the Mayans). So stand by for trouble in the summer of 2008 (1932 + 76 years = 2008). Given the inherent instability created by the huge expansion of liquidity in the global financial markets recently, says Gover, "our monetary system is ready to be blown away". The trigger could come as early as 25 June 2007 with "a huge inflation spike".
On the plus side, says Bill Meridian of Businessastrologers.com, although "the commodity markets will decline after the Saturn/Neptune square at the end of June", the long-term rising trend will soon resume he tips Rio Tinto (LSE:RIO) and Anglo American (LSE:AAL) for those wanting to buy in and says gold (LSE:GBS) "will accelerate from August". Finally, while from 2009, the housing and stockmarket may be in for a torrid time, grain (LSE:CORN) and food (LSE:AIGL) prices "will begin a sustained rise soon into the end of the decade".
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