In a recently published paper, Edmans, García, and Norli (2007) reveal a strong association between results of soccer games and local stock returns. Inspired by their work, we propose a novel approach to exploit this effect on the aggregate international level with the following three unique features: (i) The aggregate effect does not depend on the games results; hence, the effect is an exploitable predictable effect. (ii) The aggregate effect is based on many games; hence, it is very large and highly significant. We find that the average return on the U.S. market over the World Cup's effect period is -2.58%, compared to +1.21% for alldays average returns over the same period length. (iii) Exploiting the aggregate effect is involved with trading in a single index for a relatively long period. JEL Classification Codes: A12, A14, F21, G14
Do happy people predict future risk and return differently from unhappy people, or do individuals rely only on economic facts? We survey investors on their subjective sentimentcreating factors, return and risk expectations, and investment plans. We find that non-economic factors systematically affect return and risk expectations, where the return effect is more profound. Investment plans are also affected by non-economic factors. Sports results and general feelings significantly affect predictions. Sufferers from seasonal affective disorder have lower return expectations in the autumn than in other seasons, supporting the Winter Blues hypothesis.
Do happy people predict future risk and return differently from unhappy people, or do individuals rely only on economic facts? We survey investors on their subjective sentimentcreating factors, return and risk expectations, and investment plans. We find that non-economic factors systematically affect return and risk expectations, where the return effect is more profound. Investment plans are also affected by non-economic factors. Sports results and general feelings significantly affect predictions. Sufferers from seasonal affective disorder have lower return expectations in the autumn than in other seasons, supporting the Winter Blues hypothesis.
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