Hi Readers and fellow Stock Market Investors!
I was watching last night’s HBO and guess what’s on? Yep, that’s right, it is indeed that creepy sounding movie Insidious 3. The old lady who has this psychic ability to talk to ghosts or the spirits of the dead is back. And in case you haven’t heard it yet, there is a new movie that is on the cinemas titled Ghostbusters, with an all female fighting squad, contrary to the old same movie most of us knew about.
But the ghost we mentioned on the title is a different kind of ghost, although in a way it is a bit similar due to the fear factor, LOL. This so called ghost in the stock market is here because we are already in the month of August, which is also known as the “Ghost Month”.
The ghost month is the seventh month of the lunar calendar, and this year it will start on August 3 until August 31. It is a Chinese tradition and is believed to be a time when spirits of their dead relatives can visit the world of the living. So what does this have to do with the Stock market? Or investing in business mean. Well, during this time, according to the folklore, starting a business or investing or even traveling and moving into a new home might upset the spirits. And so new ventures and investments are put-off on a later date.
According to Bloomberg Wealth Research, the performance of the stock market, from 1987 to 2015, has been weak around the ghost month. It has a -2.2% average return, and has a 55% high decline for the past 29 years in the Lunar Calendar. See table below for a clearer view.
On the other hand, looking into the Roman Calendar, declines of 69% and 48% are highest on the month of August and September, with -3.9% and -1.4% average monthly return, respectively. See table below.
Now given these historical trends, and with the recent strong performance of the PSEi, there may be a possible correction coming this ghost month. And like I said, this kind of ghost is similar to the typically ghost we hear in horror movies due to the fear it creates on the market.
But fear not, as this also is an opportunity, taking advantage of the folklore, buy now while its low and sell later when its high attitude. Using the same tables above, you can easily see when will you have a higher percentage of gain after the ghost month.
So with that being said, you can look at this so called ghost in the Philippine Stock Market as the ghost shown in the movie Insidious 3, or maybe your old Casper “the friendly ghost”. Cheers!
Source: PhilEquityCorner by Wilson Sy