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Investment Fund Uses Astrology to Make Stock Picks ... And People Are Listening

By:
Chris Gaetano
Published Date:
Jul 27, 2018
By Fastfission - from Edward Grant, 'Celestial Orbs in the Latin Middle Ages', Isis, Vol. 78, No. 2. (Jun., 1987), pp. 152-173. See also: F. A. C. Mantello and A. G. Rigg, 'Medieval Latin: An Introduction and Bibliographical Guide', The Catholic University of America Press, p. 365 (on-line text here)., Public Domain, https://commons.wikimedia.org/w/index.php?curid=317560

While investment funds have used all kinds of strategies to beat the market, few have used the Zodiac. That is, until the recent emergence of the AFund, which juices its financial analysis with astrology, according to Bloomberg Businessweek. Running the fund is 70-year-old Henry Weingarten, who began his career as an East Village astrologer. He is one of several financial astrologers at the fund who use, for instance, the position of Jupiter and Mars to predict that gold will have a good quarter. But these white-collar astrologers trade their basic horoscopes for sophisticated computer models that they say take years to properly understand, attempting to distance themselves from the sidewalk charlatans and basement bunk people might associate them with. 

While one might be troubled by people by entrusting vast sums of money to those using what is literally a pseudoscience by all definitions of the term, there are other strategies that could be just as inscrutable and bizarre. For instance, some believe that a rise in attractive waitresses means a corresponding weakness in the economy.

Furthermore, no matter how strange one's investment strategy may be, a 1998 analysis found that most predictions are no better than random chance. Economist William Sherden analyzed the performance of all mutual funds with assets over $500 million between 1991 and 1995 and determined the number of funds that performed in the top half for two to five years in a row. What he found was that 50 percent of funds were in the top half the first year, 27 percent were in the top half two years in a row, 17 percent performed above average for three years, 4 percent for four years, and 3 percent for five years. These results matched what one would have found just from flipping a coin. 

This conclusion was repeated in a 2014 study by S&P Dow Jones. It found that the performance of actively managed mutual funds was essentially a 50-50 proposition: Instead of analyzing past performance, investors could save a lot of time by just flipping a coin, and they would have similar results. 

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