Investors beware: Valentine's Day markets give no love

A thorny day for traders.

S&P research finds that since 1928 the S&P 500 has closed up on just 40 per cent of Valentine's Days. Similarly, the Dow Jones Industrial Average has risen on 14 February just 43 per cent of the time.

Perhaps investors are more concerned by their plans for the evening.

There's some (limited) academic evidence to support the idea.

In their 2009 paper, "Widespread Worry and the Stock Market", Gilbert and Karaholis used social data from LiveJournal to gauge how mood affects stock market returns.

A one standard deviation rise in their "Anxiety Index" was found to correspond with S&P 500 returns 0.4 per cent lower than otherwise expected - and in 2008 the Anxiety Index has a blip coinciding with Valentine’s Day.

And if you want to trade futures near Valentine's Day, perhaps better to do it just before.

A 1994 paper, "Holiday Trading in Futures Markets" by Fabozzi, Ma, and Briley, found that "there is a significantly higher return for the day prior to a holiday" in the futures market.

The authors suggest that "holidays are often considered another form of market closing, similar to weekends". That could explain the effect on futures, as "holidays can delay settlement for up to two days and could have an effect on returns up to a week prior to the holiday."

In fact, traders seem likely to do better on Friday the 13th than on Valentine's Day.