There was breaking news Thursday morning from Punxsutawney, Pa., where the groundhog called Punxsutawney Phil was reported to have seen his own shadow. That means, six more weeks of winter, according to folklore.
And not just folklore. As MarketWatch has previously reported, a research paper found a correlation between the groundhog’s predictions — or, rather, the human interpretation of the groundhog’s purported looking for its shadow — and the U.S. stock market.
Between 1928 and 2021, buy-and-hold returns were 2.8% higher around early spring rather than long winter predictions, according to a study from Savva Shanev and Arina Shuraeva of the University of Northumbria and Svetlana Fedorova from the Financial Research Institute of the Russian Ministry of Finance.
Shanev, reached by MarketWatch, noted 2022 fit the same pattern. The groundhog saw its shadow, the S&P 500
fell by 2.49% in 10 trading days, and by 3.8% in the 30 days after the announcement.
Of course, 2023 will be a tough test for the pessimistic Phil — if you can call a groundhog bearish. Stocks have surged this year thanks to hopes the Fed’s rate-hike cycle is nearing an end, and Meta Platforms surprised investors with a $40 billion stock buyback.