Spring has sprung, and buyers are blooming

by on March 29, 2016 · 0 Comment POSTED IN: Top Sales Dog
spring-sprung

Ah, spring. The time of year when a young man’s (or woman’s) fancy lightly turns to thoughts of … buying stuff?

As the weather warms up, many salespeople will be tempted to sneak out for a round of golf or just to enjoy an afternoon in the sun.

That could be a big mistake. All that sunshine may be putting your customers and prospects in a buying mood, according to a classic research study from 2003.

Sunny dispositions
It’s no secret that sunny weather leads to sunny moods. Researchers David Hirshleifer and Tyler Shumway, from Ohio State and the University of Michigan respectively (two schools from parts of the country where spring is awaited with particular longing), wanted to know if that optimism spilled over into buying behavior.

So they looked at stock market returns from 26 countries across 15 years, comparing them against daily weather reports in the cities where each country’s leading stock exchange was located.

Their conclusion: “Sunshine is strongly [and] significantly correlated with stock returns.”

Specifically, they found that returns were higher on days with above-average sunshine.

Other research came to similar conclusions. One study, for example, found that when it’s cloudy in New York City, stocks on the New York exchange tend to lose value.

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Hirshleifer and Shumway posit that traders are more optimistic when the sun is shining. In particular, they say, this optimism is often focused on future events, which is what stock traders are most concerned with. Good news gets amplified and bad news gets discounted. So they’re more likely to buy than to sell, which in turn drives up stock prices.

Now, I know what you’re thinking. You’re thinking: “So all I need to do is quit my job, become a day trader, read tomorrow’s weather forecast, and trade my stocks accordingly.”

Sorry, say the researchers. It doesn’t work that way. Theoretically, you might be able to score some modest gains by arbitraging the weather, but the effects won’t be large enough to offset the transactional costs.

So since you still have to work for a living, here’s the takeaway for sales: If good weather has put you in a sunny mood, don’t play hooky. Call buyers and sell them something!

Source: Hirshleifer, D., Shumway, T. (2003). Good day sunshine: Stock returns and the weather. Journal of Finance (58):3:1009-32.

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