(BFM Bourse) – Tell me what your astrological sign is and I will tell you how you invest in the stock market. Investors under the Scorpio astrological sign are more cautious while Libras appreciate luxury values, according to a surprising study by broker eToro.
Investor behavior is influenced by numerous parameters, some of which are unsuspected, although documented by academic literature. Numerous studies report, for example, a weather effect on the mood of investors and their risk-taking on the financial markets.
For example, significant effects on stock performance were obtained for temperature and cloud cover, recalls Mickaël Mangot, doctor in economics at Challenges. “These effects came out negative: all things being equal, markets behave better when temperatures are cool and the sky is clear,” he explains.
In India, Le Monde reports in an article the rise of financial astrology in a country where nearly 5% of households invest in the stock market. Le Monde cites the example of Rajiv C. Karekar, a surgeon who developed the Astro Stock Forecast software. “Relying on excellent knowledge of Vedic astrology, markets and, of course, by the grace of God, he was able to find the way to the universal algorithm behind the stock market,” explains the software instructions cited in the article, even if “no results are guaranteed”.
Aries more sentimental, Capricorns less
Some astrology companies even suggest the best investments based on your astrological sign, it is also stated in the article. For fire signs (Aries, Leo and Sagittarius, Editor’s note), these companies recommend investing in stocks in the steel or arms industry.
And it is with this very unique theme that the broker eToro decided to establish a composite portrait of investors… according to their astrological sign. “EToro grouped all its global users based on their astrological sign before classifying them based on different characteristics,” explains the broker*. The investment platform has retained several criteria such as the risk score, itself being calculated using a certain number of parameters, such as the volatility of the assets that a person holds in their portfolio. He also retained the diversification rate (measured by the number of different assets they hold) or the “holding time”, that is to say the duration before the sale of an asset.
The eToro broker notes that investors born under the sign of Scorpio, known to be secretive and passionate, have the lowest risk score, just like Libras, often presented as honest and indecisive. These investors would tend to adopt “also a fairly cautious approach to investing”, according to data compiled by eToro.
Concerning the criterion of average holding period, it is Aries and then Cancer who are the most loyal, whereas Capricorn and Libra tend to shed their assets more easily. And on the criterion of diversification, Capricorns and Scorpios like variety, where Cancer and Virgos tend to put their eggs in the same basket.
“The data also reminds us that each of us takes a slightly different approach to investing, depending on our goals, risk appetite, and the asset classes and sectors we know best. what’s important is making sure you’re well diversified. Whether you’re a cautious Scorpio or a more adventurous Capricorn, having a balanced portfolio and making sure you don’t put all your eggs in the same basket will always be beneficial to you,” says Antoine Fraysse-Soulier, market analyst at eToro.
Luxury for Libras and McDonald’s for Sagittarius
The eToro platform has also detailed the preferred stocks for each sign of the zodiac. Data compiled by eToro shows that Scorpios, generally perceived as compassionate, favor Beyond Meat stock more than any other star sign, despite the company’s poor share price performance over the past year. For their part, Virgos, who have a reputation for being more thoughtful, are more inclined to overinvest in financial services stocks Block and Berkshire Hathaway, while Libras overinvest in luxury stocks such as LVMH.
“This financial astrology may seem like fun pseudoscience, but it reminds us that investors are human and that behavioral factors can be as important in markets as macroeconomic fundamentals and corporate profits,” concludes Antoine Fraysse-Soulier.
*”This data was extracted from the eToro platform on October 4, 2023. For each astrological sign, eToro chose from the first 50 securities the six securities presenting the maximum difference between the percentage of security holders of the astrological sign (this that is to say the proportion of the zodiac which is currently invested in the security) and the overall percentage of security holders”, details the broker.
Sabrina Sadgui – ©2023 BFM Bourse
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