Struck by the large number of studies showing that bumps and dips in the stock market can be predicted by such factors as interest rates, credit spreads, dividend yields, consumer sentiment, and cold weather—despite economics Nobel laureate Robert C. Merton's description of any attempts to estimate assets' expected return as a "fool's errand"—Robert Novy-Marx of the University of Rochester set out to see what other market "predictors" he could find. Using the same rigorous statistical methods that underpin all those studies, he found several such predictors, including sunspots and the relative positions of the planets Mercury and Venus in the sky, he writes in a straight-faced article in the prestigious Journal of Financial Economics. (In a footnote, he hints that the weakness in such "prediction" findings is the standard assumption that there's a simple linear relationship, consistent over time, between these random portents and stock returns.)
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