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The market is not afraid of snakes; Chinese zodiac won't push market lower in 2013

What do the years 2001 and 1929 have in common? If you said, “years in which terrible things happened,” you're right. If you said “years in which the stock market posted double-digit losses,” you're also right. And if you said, “years of the snake (based on the Chinese Zodiac),” you're right again. The relevance? If you guessed that 2013 is a year of the snake, you're right. If you guessed “none” you're also right, but more on that a bit later.

According to Art Cashin, in a recent CNBC appearance, “The year of the snake is historically the least bullish of the twelve signs in the Asian zodiac.” Sam Stovall, chief equity strategist at S&P Capital IQ, put an even finer point on it, saying “Since 1900, the S&P 500 posted its only average calendar-year decline during the Year of the Snake, falling 3.8%, and rising in price just 33% of the time, which was the worst price performance and frequency of advance of all 12 years.” The story ran today in the Los Angeles Times and the Wall Street Journal, among others. Those hoping for an excuse to sell everything and invest instead in canned goods and waterproof matches should read no further. Skeptics, read on.

“Why,” you might ask, “if this is so significant, have I not heard about it before now?” I could posit that everyone who believes in the theory was probably too busy to mention it last year, as they were preparing for the Mayan apocalypse of 2012, but that sounds a bit too cynical. Another possible reason, as everyone who has spent time staring at paper placemats in Chinese restaurants knows, is that the Chinese Zodiac is not based on the alignment of the planets or stars, but on something even more unchangeable—an endlessly repeating cycle of 12. Now maybe I'm just naïve, but an endlessly repeating cycle of 12 doesn't sound to me like very powerful hoodoo.

Julian Close

Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.