Boston Snow Indicator

Since it is nearly Christmas, I thought I would write something about the Boston Snow Indicator.

The theory is that if there is snow in Boston on Christmas day then the price of stocks will go up for the coming new year.

Hmm.. I’m not sure just how valid this economic indicator is, But I don’t think that I will place much faith in the Boston Snow Indicator this (or any) year!

Unfortunately, I have had a good look around on the internet and there does not seem to be much evidence to support the accuracy of the Boston Snow Indicator.

I took a look at the weather reports for 1999, and it seems that Boston did not have any snow on Christmas day. This would support the major drop in the markets for 2000. So maybe there is some truth in the Boston Snow Indicator.

However, there was 0.3 inches of snow on Christmas day in 1995. In the next year, the S&P500 gained about 30%

But I also noticed that the record snowfall for Christmas in Boston was in 2002. The S&P500 continued to plummet in the following year!

So there you go. I would advise taking the forecast of the Boston Snow Indicator with a pinch of salt and a good dose of skepticism.

Incidentally, I was not sure whether to file this under Technical Analysis or Fundamental Analysis, so I put it in both.

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Daryl Guppy