Want to sell stocks? Maybe it's just the weather

Many investors and analysts have attempted to find seasonal patterns in the stock market, even if they are rarely able to provide a coherent explanation for the nuggets uncovered by their data mining. But in fact, some seasonal trends can be explained by widespread winter-related depression, according to economist Mark Kamstra.

"It's natural for a large percentage of the population — 10, 20 percent even — to be somewhat or severely affected by seasonal depression. And so it struck us that it might impact investor behavior, because depression leads to anxiety and risk aversion, so if people become risk-averse in the fall, then they might rebalance portfolios, get out of equities, into safer asset like Treasurys," Kamstra, professor of finance at York University, said in an interview with CNBC's "Trading Nation."

Indeed, research has found that "even no-depressed people took fewer risks in the winter, and depressed people particularly took fewer risks in the winter. When we looked at equity exchanges around the world ... you see big swings in asset prices."

As might be expected, the size of the reaction to cold weather varied with how cold the weather is.

"The biggest [seasonal swings] we saw were in places like Sweden, and even in the U.S. and Canada and Europe we saw substantial swings, and opposing swings in the risk-free assets like Treasurys," added the economist, who has previously served at the Federal Reserve Bank of Atlanta.

A trader works on the floor of the New York Stock Exchange.
Getty Images
A trader works on the floor of the New York Stock Exchange.

Humorously, that could lead to a real advantage for those who aren't afflicted by seasonal depression.

"At the right price, other people will be willing to take on the risk, so assets change hands and prices change and I guess everybody's happy," he said.

Of course, "happy" is always a relative term.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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