Weather, biorhythms, beliefs and stock returns-Some preliminary Irish evidence

We investigate whether there exists a relationship between eight proxy variables for investor mood (based on the weather, biorhythms, and beliefs) and daily Irish stock returns over the period 1988 to 2001. Our study is motivated by recent research that argues that people's decisions are influenced by their feelings, especially when the decision involves risk and uncertainty [e.g., Psychol. Bull. 127 (2001) 267-286]. We find that some of the variables proposed in the literature (rain and time changes around daylight savings) are minor but significant influences. We also find preliminary evidence for the relationship between mood proxy variables and equity returns being more pronounced in times of positive recent market performance. This finding is consistent with psychological research showing that people in a good mood (in this case, because of presumed gains in their investment portfolios) are more likely to allow irrelevant mood factors to influence their decision making [e.g., Mackie, D. M., & Worth, L. T. (1991). Feeling good, but not thinking straight: The impact of positive mood on persuasion. In: Forgas, J. P. (Ed.), Emotion and Social Judgments (pp. 201-219). Oxford: Pergamon Press].