Physician's Money Digest, August31 2003, Volume 10, Issue 16

Journal of Finance

Believers in far-out market theoriescan add a new one to the list. Anoffbeat study by 2 university businessprofessors, published recently in the, shows that sunshinemakes stock prices grow. Using16 years of weather data in 26 markets,the study concludes that theaverage daily return on stocks is 8basis points higher on sunny daysthan on cloudy days. Over the courseof a year, that's 22% in extra gains.The theory is that sunny days buoyinvestors' psyches, making themmore optimistic about the futurecourse of the market. The oppositehappens when clouds and rain arearound. Financial experts caution,however, that trading costs wouldlikely cancel any extra profits.