‘Ghost Month’ in August affecting stocks?



Is the “Ghost Month” to blame for the recent rollercoaster ride in stock markets around the world?

During the first two weeks of August, stock markets worldwide had a freefall, went back up again, slid again, then back up once more. The Dow Jones Industrial Average (DJIA), for example:

  • plummeted 4.31% on August 4 after credit rating agency S&P downgraded the United States
  • declined 5.5% more on August 8
  • bounced back 3.98% on August 9
  • fell another 4.6% on August 10
  • but rose 3.9% on August 11

And it’s probably just starting.

U.S. stocks were not the only ones in a whirlwind these first weeks of August. As seen in the chart below, stock exchanges in the UK, Korea, Hong Kong and the Philippines all went through a crazy round of market volatility.

Who’s to blame?

The U.S. credit rating downgrade by Standard & Poor’s? It certainly was a major factor in this stock market onslaught.

High frequency trading (HFT) or the use of sophisticated software and technological tools to churn small but consistent profits in just a fraction of a second? Perhaps, but then again, computers themselves do not make decisions.

Or is it the Chinese belief in the Ghost Month? This Oriental superstition warns that during the Ghost Month (that is, August), ghosts and spirits of the dead roam freely in the world of the living. It is said that during this time, people should avoid making important decisions — such as getting married and perhaps, buying or selling stocks too — because it could bring bad luck.

In Chinese tradition, the 15th day of the 7th month in the lunar calendar is called the Ghost Festival, a day where the gates of hell supposedly open making way for evil spirits to mingle with the living.

Eerie indeed, but what’s spookier is the fact that this year the Ghost Festival is not yet over and in fact, it will be celebrated this Sunday, August 14, 2011. Let’s just hope the ghosts this Sunday are able to return to where they came from before stock markets open on Monday so they won’t be able to cause further chaos.

It may be superstitious, it may be wrong, but at a time when stock prices go up and down in a crazy fashion, it’s better to hold on to anything. Good luck to us next week. 🙂

About the Author

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