Chinese New Year is right around the corner, with the holiday beginning this Sunday. In the Cantonese dialect, many celebrate the New Year by saying "Gung Hay Fat Choy" – an expression that wishes prosperity on others. Investors are certainly hoping that prosperity will be in their fortunes in 2010 (or year 4708 in the Chinese calendar).
The Chinese zodiac has 12 animals that represent different personalities. 2010 is the year of the tiger – but will the markets roar with success or only growl with frustration?
Unfortunately, the year of the tiger has historically been a poor year for the stock markets. In fact, it has been the third worst performing year of the 12-year cycle. Since 1897, the Dow
Industrials has barely turned in gain (up 1.63% on average) during the years of the tiger. That barely ekes out the declines during the years of the snake (down 0.75%) and the horse (down 1.91%).
Dow Change by Chinese New Year Sign
Are better times coming though? One good piece of news for investors – the year of the rabbit (the market’s best year of the cycle) is just a short "hop" away, as it will be celebrated next year. And what about the year after that? The year of the dragon returns and may help "fire up" the markets then (that’s the Dow’s second best year).
But could there be some possible hope for this year? In just over half of the years of the Tiger since 1897 (5 out of 9 occurrences), the Dow has managed to finish the year with gains. Additionally, the Dow has posted very impressive gains in each of the last 2 times the year of the tiger was celebrated.
Years of the Tiger: Dow Change
1914 -30.72% (Worst year)
1938 +27.73% (Best year)
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