In our previous post we asked whether stock market success is down to luck, magic or bravery? It seems fitting, therefore, to look at another ‘outside’ factor that could affect your success in the stock markets…astrology. Could there be some credibility in the planets? Financial astrologers believe so…

Stock Market Prediction by Donald Bradley is a well-known book on the subject of financial astrology. Bradley’s method of foreseeing changes in the market involves assigning a numerical value to the position of the planets and stars on any given day. He then plots the values on a graph. The peaks and troughs of that line should, in theory, plot “turns” in the fortunes of stocks, bonds and commodities. It sounds inconceivable, but the model has been described by market watcher Peter Eliades as “eerily accurate”.

According to the Financial Times, financial astrology is “growing in popularity and complexity”. It’s mysterious that so many individuals who you’d imagine would rely on mathematical rationality are resorting to the stars for assistance and traders keep coming back for more. Could there be something in it? Astrology is arguably, superstition and perhaps the intense pressure of jobs such as those of the Wall Street traders makes them more likely to hunt for patterns in the stars. Superstitions in general tend to increase when people are under stress. The very complexity of the movements in the heavens also makes it likely that patterns will be detected where there is none. It’s no coincidence that the same can be true for those who study stocks.

Wall Street’s best-known astrologer, Arch Crawford, nicknamed “Crash Crawford” when he predicted the “flash crash” of 1962, is unbowed in his conviction that his method works. He claims to have predicted the 2008 crash when he spotted “some pretty ugly aspects, squares and oppositions and 45-degree angles”. Astral bodies arranged in squares, he says, give “energy” and that might lead to bad events on Earth. The energy was to be at its worst on October 10 and he predicted that would be the worst day. On October 10, the Dow Jones opened down 800 points.

But the 2008 crash was caused not by energy from outer space, but by toxic mortgages that were sold by the banks over a number of years and then repackaged in such a way that their toxicity was hidden from investors. These supposedly solid loans then collapsed, en masse. Thus, the crash.

In any case, is there still a chance that stock market success could be ‘written’ in the stars? It’s an interesting and exciting prospect, but like the lottery, we’re not taking our chances preferring instead, to opt for the more traditional methods of fundamental and technical analysis!