St. Patrick's Day, celebrated on the 17th of March, is nearly upon us. It is a mere 4 days away. While this festive celebration is mainly associated with drinking, street parades and generally paying homage to Ireland in some way, it is also notable for something else. Not such a well known fact about St. Patrick's Day and one that could make you money is that immediately preceding St. Patrick's Day until one trading day after, stock markets tend to consistently rise. This peculiar occurrence is attributed to a rise in mood levels as people await the celebratory day which encourages investment.
This first came to my attention in an article published in the paper edition of Investor's Chronicle. I have further researched this phenomenon, whose argument that St. Patrick's Day has a general upward effect on market stock prices has been further attested to by Equity Clock and Wright's Persectives, among others.
The US stock market climbs on average by 0.34 percent two trading days before St. Patrick's day, which rises to 0.37 percent for the day before. As St. Patrick's day falls on a Saturday this year, figures for the day itself are not as relevant here, though there is an small average rise of 0.07%. The day after St. Patrick's Day sees an average rise of 0.19 percent. When markets reopen next Monday 19 March, there could be a small rise in stock prices, if history is to be accurate. These figures are based on a study which analyzed the US Stock market around the time of St. Patrick's Day from 1946 to 2000.
S&P 500 (IVV)
The S&P 500 rose every year between 2006 and 2010 for the four day period, 15 March - 18 March.
2006 - 0.6 percent
2007 - 1.6 percent
2008 - 1.7 percent
2009 - 5.8 percent
2010 - 1.4 percent
2011 - Simon Thompson has pointed out that even during the volatile stock market period after the Japanese earthquake disaster of last year, investors "who held their nerve for a day longer would have made a profit" as stocks made a fractional loss for the four day period, March 15-18, 2012. Japan's economy is still reeling to an extent from the earthquake, and we will see how investors react to news from China of slower expected economic growth. However, favorable market factors as we move towards this four day period include decreasing unemployment levels in the US and the final relief felt by markets in the knowledge that Greece will definitely not default. Based on S&P performance since 2006 in particular, an investment option to consider would be to buy S&P Index Tracker, as Thompson advises, and sell at the close of the next trading day after St. Patrick's day in order to take full advantage of any potential rise. In the past sixty years, the S&P 500 has risen in value by 1% on average over the four day trading period around St. Patrick's Day.
The budget airline is also the largest in Europe. Though leading up to the festive day, Ryanair has not tended to fare so well; in the following month after 17 March, the airline's stock has risen by 3.98% on average from 2000 to 2010. This has been attributed to a surge in demand for trips to the Emerald Isle after St. Patrick's Day. Preceding St. Patrick's Day, RYAAY has tended to fall in price, with average losses of around 3% in the week prior to the 17th of March. Saying that, the stock has actually climbed from January 3 levels of 27.77 to present day figures of 34.15. However, it would be worth monitoring this stock's performance this week to see if it falls in price before buying. If historical price trends are anything to go by, it will rise on average by approximately 3% by the end of the following trading week.
Guinness' parent company has seen a steady stock price rise since the turn of the year, going from a January 3 price of 87.63 to a present day price of 96.88. It has continued to gain slightly despite investor apprehension over China's reduced economic growth outlook. In 2011, the March 17 stock price for DEO was 70.92. By May 2, it rose to 79.19, indicating that St. Patrick's Day gives the company a boost that can last for over one month. According to Equity Clock, one-month gains immediately after St. Patrick's Day from 2000 to 2010 averaged 4.38%.
Triple Witching Week
Another factor to consider for this consistent rise in stock price is that triple witching week crosses over with St. Patrick's Day. This tends to give the S&P 500 a boost, as investors are "forced to buy into the market to close their positions," as stated by Simon Thompson. Triple Witching Day this year falls on Friday 16th, this coming Friday. This is also likely to affect stock prices. During triple witching week, stock prices have historically risen far more often than they have fallen.
The Irish stock market rose 3% in 2011 on the day itself, March 17. The Dow Jones (NYSEARCA:DIA) rose 1.4% and the S&P 500 was up 1.3%, according to Wright's Perspectives. There will be skeptics who will maintain the view that such statistics that point to a direct stock market rise during the St. Patrick's Day period are merely coincidental. However, given the consistency of the numbers, it seems very plausible that the joy associated with St. Patrick's Day encourages investment in the stock market, causing prices to rise.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.