In Box

How High the Moon?

Eclipses move markets. Really.

Like baseball players and sailors, stock traders are a superstitious bunch. They consult horoscopes, wear the same pair of socks or underwear during a hot streak, and keep teddy bears around to rub for good luck. But a recent study by Gabriele Lepori, a professor of behavioral finance at the Copenhagen Business School, suggests that investors go beyond passive belief in the uncanny -- they actually base investment decisions on old wives' tales.

Lepori analyzed 80 years' worth of data from four U.S. markets and 10 Asian countries to test whether decisions changed around the time of solar and lunar eclipses, regarded across cultures as inauspicious times to take risks or begin new ventures. The results clearly show that enough traders act more conservatively during eclipses to affect the market. During the three days surrounding an eclipse, demand drops; stock returns are lower than average; and fewer stocks change hands.

Lepori also found that traders are most superstitious during times of market upheaval like the present, when investors feel they have the least control over events. When eclipses occurred during such periods, the effect was about three times as large.

The good news, Lepori points out, is that the market generally corrects itself within a couple of days after the eclipse. But in the interim, it's probably best to keep one eye on the stock ticker, and another on the moon.


In Box

Epiphanies: Ashraf Ghani

Afghanistan's first postwar finance minister has now set his sights on reforming the country from the ground up, calling out his former boss, President Hamid Karzai, for corruption and failure. Here, the poetry-loving Pashtun speaks with FP about his troubled homeland's past and future.

I remember touring Afghanistan with my wife back in 1975, '76, and '77 -- there was this immense hospitality about the Afghan people. It was an Islamic culture, but they practiced an incredibly tolerant version of Islam. It was nothing like what exists in parts of Afghanistan today.

The nouveaux riches, as I call them -- the warlords who currently rule Afghanistan -- are a relatively new phenomenon. They rose to power essentially because of the CIA. And they brought with them a totally different way of ruling Afghanistan, which really obscured many of the best qualities of Afghanistan.

Dean Acheson is a figure that I admire greatly, even though I think he's sometimes forgotten in America. He was integral to building the Marshall Plan, even though George Marshall gets much of the credit. Deng Xiaoping in China is also very important. People talk of Mao Zedong, who attempted these Great Leaps Forward -- but whenever he attempted one, tens of millions would die or be impoverished. Deng really took China in a totally different direction, with profound consequences.

Pashtuns are fiercely individualistic, and they are very proud. No Pashtun will ever admit that another Pashtun is his natural superior. So what you always have is competition for leadership, and in these competitions someone must win. It could be a young man, or it could be an old greybeard -- but the key notion is that, once the competition is over, both the winners and the losers should be deserving of respect.

Illustration for FP by JOSEPH CIARDIELLO