Can popular music predict the stock market?
Looks like it:
Popular music may presage market conditions because people contemplating complex future economic behavior prefer simpler music, and vice versa. In comparing the annual average beat variance of the songs in the U.S. Billboard Top 100 since its inception in 1958 through 2007 to the standard deviation of returns of the S&P 500 for the same or the subsequent year, a significant negative correlation is observed. Furthermore, the beat variance appears able to predict future market volatility, producing 2.5 volatility points of profit per year on average.
Source: “Music and the market: Song and stock volatility” from The North American Journal of Economics and Finance, Volume 23, Issue 1, January 2012, Pages 70–85
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