Latest Stock Trading Strategy That Went Viral

A viral post. A 20-year-old paper. 551 citations. The data is harder to dismiss than the premise.

Last week, a post on X went viral among the finance bros. Someone made a bold claim: you can beat the stock market by trading around the lunar cycle. If you buy during the Full Moon and sell at the New Moon, you can make abnormal returns and beat the market. Markets fall around Full Moon and improve around New Moon, allowing you to buy low and sell high!

I haven’t checked the math on this, but according to others, it checks out. To be honest, the post wasn’t fully clear about the strategy, when to buy, and when to sell. However, the post racked up thousands of comments and likes, and the finance bros spent days arguing about it.

If you believe markets are perfectly rational machines that only respond to earnings reports and interest rates, you have a problem, because this post violates that theory.

The rational markets hypothesis, the cornerstone of most mainstream finance, says that stock prices reflect all available information at all times. There is no edge. There is no pattern to exploit. The price is always right.

But here we are, with a claim on X that has intrigued our team. So we did what we love: we searched the academic literature to see whether any peer-reviewed research had examined this phenomenon before.

Here is what we found

Economics is full of stories that sound absurd until someone shows you the data. That is what The Decoder is for — one story, fully unpacked, every Friday.

Here is a Summer School Discount for readers like you!