How to achieve better results on the stock market? You have to win Eurovision

A recent study published by researchers at Bar-Ilan University in Israel found that traders in a country that won the Eurovision Song Contest have improved stock market performance.

Winning gives traders optimism

Publication The Winner Takes It All: Investor Sentiment and the Eurovision Song Contest showed a positive shift in investor sentiment in the winning country, which in turn provided a positive abnormal rate of return of around 0,35% on the first trading day after each final starting in 1985.

From a psychological point of view, the level of excitement and euphoria associated with winning translates into positive investor sentiment, as it is the result of an overall "Social mood".

Positive investor sentiment is often related to the optimism of traders active in certain markets. In some cases, this may have a negative impact on the attitude of the trader in question. However, in this study, an abnormal positive rate of return was consistently recorded in the 24 hours after the final of the annual international show.

For example, the victory of Poland, or any other country, will probably provide its citizens with a much needed positive psychological impulse, and thus also financial, because on Monday after the opening of the stock exchange they will become richer.

What is Social Mood

The concept of "social mood" social mood) reflects the extent to which a broad-based social approach, both optimistic and pessimistic, can influence traders' emotions and hence the markets. While these increases are not surprising, there is no guarantee they will happen every time.

In particular, due to the ongoing war in Ukraine, the public mood across Europe may lead to a victory for this country this weekend, but it is unlikely that the Ukrainian markets will record the same results as the winners so far.

More Saxo Bank analyzes are available here.

Author Kim Cramer Larsson, Technical Analyst at Saxo Bank