The Weather Affects The Stock Market

So I began to look up the long-term average of weather conditions for each day in order to predict the weather for the given day. Most of the time it was pretty precise but it could have been better.

In order to study how stock prices react to these events, approximate three years of continuous daily stock price are chose, beginning at 17th March 2008 and ending more than three months after the final event at 22nd April 2011. In addition, SHANGHAI Stock Exchange Index (SSE) is adopted as a proxy of the market portfolio.

Investment analysis is said to be psychological in various aspects. The irregularity observed in financial markets in recent times has yet again brought to question the practical application of traditional financial theory and the Efficient Market Hypothesis. There is therefore the need to put this base of accepted finance theory under scrutiny. The foundation of one of the broadly examined problems with traditional financial theory is the effect of psychological influences on individuals’ behavior towards investment. According to Slovic (1972), Daniel, Hirshleifer ,Subrahmanyam (1998) and Hilton (2001), they believe that financial markets are functioning at a rapid and increasingly cut throat environment and have been transformed in several ways, one of which is technological. The growing rate of technology has had an immense effect on trading and investment. Technology has aided in allowing information to be easily accessible to investors, but there has been little focus on the issue of interpreting the information skillfully. It is important to note that the appropriate use of information is a crucial part in making investment decisions.

The US Presidential elections are around the corner and the stock market has been stuck in a range for more than three months. There has been a long-standing interest among the market participants on the behavior of the stock market and the US Presidential elections.

While there is always weather and different phenomenon that happen we capitalize on whatever those phenomenon are

Keynes (1936, p155-56) describes the stock market using an analogy between professional investment and newspaper beauty contest: “Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole…It is not a case of choosing those which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligence to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth, and higher degrees.” The Stock Market decisions work based on conventional values too, where each is not concerned with determining the real stock value, but the market value the community will place on the stock, before everyone else does.

Even though we made profits in the last week of our trading game, we were still unable to compensate for our total losses incurred. Previously, we had the mind-set that the stock market was far simpler; people buy shares in the hopes of making money. Some people buy and sell often for speculation purposes, while others are long term investors. Sometimes people make a lot of money very quickly, and sometimes people lose a great deal just as fast.

• However, severer weather results in a slow growth “in the second half of the year, and particularly in the final quarter.” (Annual Report and Accounts 2010, 2010; p8)

Under what conditions are prediction markets most likely to perform relatively well and relatively poorly? 417

What type of weather qualifies as a weather delay day? A weather delay day is a day in which work must be completely stopped because efficient construction operations will be difficult to achieve with the weather conditions. Three key factors affecting weather delays and disruptions are; type of construction, on-site drying conditions, and the intensity of rainfall. The threshold values for adverse weather vary from location to location. The threshold values also depend on the trades working and various other social and natural factors. However, a weather day should be decided based on the combination of the threshold values, type of work affected, and common sense. Table 1 below shows a sample adverse weather day calendar. (Glavinich n.d.)

Werner F. M. De Bondt and Richard Thaler conducted a study to investigate the stock market. This study examined the impact the overreaction of market behaviour and the psychology of individual decision making has on stock prices. The main goal of this study was “to test whether the overreaction hypothesis is predictive” (pg. 795). They tested two hypotheses (pg. 795):

The success of the model is attributed to Yale’s ability to combine both quantitative analysis (mean-variance analysis) with market judgments to structure its portfolio. In addition, Yale also uses statistical analysis to actively test their models with factors affecting the market, therefore

Many stock market anomalies could not be explained by Efficient Market Hypothersis (EMH). The psychological biases, such as disposition effect, might help in explaining some of the behavioural anomalies. Many researchers found that the presence of abundance of disposition-prone investors could affect the market prices. However the underlying causes of disposition effect is still unclear.

These studies discussed above implicitly assume that the local and US investors have homogeneous expectations about future prospects of all markets. However, in practice, different market conditions can cause investors to generate differential risk perceptions. Some studies argue that investor sentiment may augment to the price divergence between ADRs and their underlying stocks.

In the globalized world of today, the way the systems of the planet operate could be described as ebbs and flows, because there is no end point and no isolated system. Whether it is the global economy or pattern of weather, there is always a widespread exchange of interactions and ripple effects. One such example is migration, which is simply a flow of what earth has an abundance of: humans. That is the subject of this investigation, specifically migration in the Mediterranean region, an area of the world so flooded with immigrants and refugees that it is in crisis.