There's more to a Blue Monday!
A
week ago I arrived at work and noticed that about 10 people wore the same
coloured baby blue shirt, myself included. When asked if it was planned or just a
coincident, majority jokingly replied by say “it’s a Blue Monday”. In as much
as I believe it was a mere coincident, I couldn’t help but wonder if there was
more to this.
Alexander
Kjerulf (Forbes, 2013) described a Blue Monday as a set of negative emotions that many people
get at the beginning of the workweek normally due to unhappiness at work. It
contains elements of depression, tiredness, hopelessness and a sense that work
is unpleasant but unavoidable. Monday blues are contagious, hence their impact
is understandable in a work environment where there’s physical contact, surprisingly it does not end there as financial markets are impacted too.
Financial
Markets are known to be efficient, hence the efficient market hypothesis (EMH)
that states that at any given time prices fully reflect all available information
on a particular financial market. However there are market anomalies that
contradict the EMH, such as the time series Monday effect anomaly which
suggests that returns on other Mondays are less than any other day of the week.
An
unsettled debate has been whether the Monday effect is driven by individual or
institutional investors. Individual investors tend to have more sell orders on
Mondays, whereas institutional investors tend to have fewer transactions on
Mondays or if they have more or "normal" transactions then they result in large negative returns; however both
types of investors are influenced by information received on Friday or over the
weekend.
Clearly
the Monday effect is driven by both types of investors, interesting enough the
mood of investors play a significant role as most of them tend to be pessimistic
on Mondays. This is called the Blue Monday Hypothesis, where investors take
fewer risks on their investments.
So
next time you consciously embrace a Blue Monday think of all the untapped
profits rooming around in the financial markets streets waiting for you to cease!
LOL
References
Brooks, R.M &
Hongshik, K. (1997). The Individual Investor and the Weekend Effect: A
Reexamination with Intraday Data. The
Quarterly Review of Economics and Finance, 37(3):725-737.
Pettengill,
G.N. (1993). An experimental study of the “blue-monday” hypothesis. The Journal of Socio-Economics,22(3):241-547.
Singleton,
J.C. & Wingender, J.R (2003). The
Monday Effect: A Disaggregation Analysis. Quarterly
Journal of Business and Economics, 42(3/4):91-111.
Smith,
J. (2013). 11 Ways to Beat the Monday Blues.
Forbes.
Yilmaz,
O. (2013). Between-country differences in the Monday Effect: Evidence from
European Equity Markets. Tilburg
University,1-29.
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