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Hit TV Show Ends; Stock Market Goes Down

An economist finds a pattern that will be of interest to investors.
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Mad Men. (Photo: AMC)

Mad Men. (Photo: AMC)

Here's a tip for you: Don't buy stocks on Monday, May 18th.

No, I have no inside information that the Greek debt issue will reach a crisis point on that date. But I have solid knowledge that the television series Mad Men will conclude the previous evening.

And, if past patterns hold, the dark mood caused by its passing will affect the markets the following day.

"I find that major TV series finales that attract large numbers of U.S. viewers are immediately followed by a decline in U.S. stock returns," writes economist Gabriele Lepori of Keele University.

The apparent reason for this, he writes in the Journal of Economic Psychology, is simple enough: The loss of characters viewers have come to see as friends puts fans in a funk, and "negative mood reduces the net demand for risky assets."

Lepori collected data on 159 series finales, from The Fugitive on August 29, 1967, to The Closer on August 13, 2012. "Given that a handful of pairs of finales were broadcast on the same evening, or between two non-consecutive trading days, the final sample contains 147 unique 'event days'—trading days preceded by a series finale," he writes.

The loss of characters viewers have come to see as friends puts fans in a funk, and "negative mood reduces the net demand for risky assets."

He then looked at the performance of the United States stock markets on those days, making sure to cover various categories of stocks. He also took into account various macroeconomic indicators and another factor known to influence mood and therefore market activity: The weather in New York City.

Lepori found that "the typical TV series finale—which is watched by 15.5 million viewers, airs in May, and is followed by a Monday trading day—is estimated to be followed by a negative daily stock return (-0.12 percent), all else equal."

He also discovered that "the greater the popularity of a TV series, the larger the decrease in stock returns following the finale."

"This effect is largest for the Russell 2000 index, and smallest for the New York Stock Exchange and S&P 500 indices," Lepori adds. "This process is precisely consistent with a mood interpretation of the results, given that small-cap stocks play a larger goal in the former index, and individual investors have a stronger impact on the pricing of small stocks."

Lepori concedes that, with the advent of time-shifted, on-demand viewing, this phenomenon may very well decline in the coming years. But for now, at least, he has discovered a correlation between sadness at having to say goodbye to old, albeit fictional, friends, and the price of stocks traded by individual investors.

"The stream of research on so-called 'retail therapy' claims that bad mood leads to increased consumption," he notes. The flip side of this, he adds, might be "an emotional choice to consume more and invest less."

Countering that would require a real advertising/marketing genius. Hey—come to think of it, Don Draper will be available!