Thursday, June 9, 2011

Bad Air Days

If your portfolio has had some rough days lately, it might just be the weather. Seriously: Two researchers in Israel have found that days with bad air quality correlate to a significant basis with poor air quality. The researchers took air samples from Wall Street as well as in Brooklyn, and found that bad air days reduced the Dow Jones average, the Nasdaq, the S&P 500, and even the Philadelphia Stock Exchange Index.

The differences, measured over the course of ten years, were small but persistent. Stocks tended to rise by 0.o4 percent to 0.06 percent on days with normal air quality. But on days when the air quality was listed as unhealthy, stocks tended to lose between 0.26 percent and 0.45 percent.

The researchers don't have a definitive answer as to why this happened, but they propose that poor air quality leads to downbeat moods. Mood has long been liked to various aspects of decision-making and economic choices; it's possible that a gloomy day may simply lead to pessimism.

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