Mercury retrograde!

Because there are still subscribers to my blog who don’t know that Friday posts are never serious and always quirky, please be advised that the following is written with a big dose of irony.

As I publish this, we are in the clear once again when it comes to the devious influence of Mercury on our lives. I am talking about the periods of Mercury in retrograde, i.e. when the planet Mercury seems to move backwards on our night sky. According to the authoritative website “Oprah Daily” Mercury retrograde can have an impact on people’s minds and mental processing and create phenomena like brain fog and heightened anxiety. Because of the backwards movement of Mercury, it is also common for people to experience nostalgia.

The last period of Mercury retrograde in 2022 ended on 2 June and the next one will start on 9 September. According to Oprah Daily, Mercury retrograde is often surrounded by a period named ‘Mercury retroshade’. In the two weeks before the start of a Mercury retrograde episode and the two weeks after Mercury retrograde ends, the same feelings of anxiety and brain fog can set in and persist. Good thing that we are now out of Mercury retroshade as well and in the clear until late August.

Of course, Mercury retrograde does have an impact on stock markets as well. If people who believe in astrology experience heightened anxiety during Mercury retrograde, they will tend to stay away from investing in risky assets like equities. This allowed a couple of researchers to investigate if stock market returns are different during periods of Mercury retrograde than at other times. And by looking long enough, they found that during the two to three weeks when Mercury is in retrograde, stock market returns are lower than the rest of the year. If you annualise the return difference you end up with 3.3% per year, but since periods of Mercury retrograde are just two to three weeks long, the effective underperformance per event is 0.1% to 0.2%. But hey, every little bit helps.

The researchers stress that it is not Mercury per se that creates the underperformance but the behaviour of investors during periods of Mercury retrograde. And in countries like Greece, Italy or Spain where more people believe in astrology, the effect is stronger. In the US and the UK, however, Mercury retrograde is less influential, but as you can see from the chart below it is still visible. So instead of ‘Sell in May…’ I recommend selling in September and coming back in November this year.

Market performance during periods of Mercury retrograde

Source: Bloomberg, Oprah Daily