Friday the 13th – Not So Unlucky

As if the stock market doesn’t have enough reasons to be skittish, here comes Friday the 13th, a day that many superstitious investors avoid. In a Wall Street environment that hangs on to esoteric omens like the Super Bowl effect and the lipstick indicator, Friday the 13th often brings on a serious case of investment chills.

Market statisticians disagree, pointing out that, over the long run, the market has actually done better on this supposedly unlucky day, gaining an average of 0.28%, compared to 0.02% for other trading days. Explaining why stocks tend to do better on Friday the 13th, on the other hand, isn’t easy. One theory is that superstitious amateur investors, anxious to avoid the possible negative impact of the day, may sell stocks, creating buying opportunities for more savvy market players. The result is an overall rise in stock prices.

The ultimate lesson here may be to avoid using superstition as a market strategy. Many obscure but time-honored Wall Street indicators don’t hold up under close scrutiny. One example is the Super Bowl effect, which predicts a year-end up market if an NFC team or a team from the original NFL wins the big game. It gained traction as a forecaster between 1967 and 1997 when it was 90% accurate, but it’s been in a slump lately. Beginning in 1998, it’s been right just four out of 10 times and failed to predict last year’s market avalanche. This year’s positive prediction, based on the win by the Pittsburgh Steelers, also looks like a long shot.