Global Investing

Solar activity and stock markets revisited

What can Galileo Galilei tell us about today’s volatile financial markets?

In 1610, shortly after viewing the sun with his new telescope, Italian physicist Galileo Galilei made the first European observations of sunspots. The sunspot number is calculated by first counting the number of sunspot groups and then the number of individual sunspots.

According to NASA, monthly averages of the sunspot numbers show that the number of sunspots visible on the sun waxes and wanes with an approximate 11-year cycle.

As I mentioned in my previous blog, some have predicted that 2012 will bring a maximum solar activity in sunspots after sunspot activity reached a 100-year low in mid-March 2009 (which coincides with a cycle low in equity markets). And the concern was that a stock market low may happen in 2012, which coincides with either a sunspot low or high depending on the cycle.

However, according to the latest predictions by NASA, we may not reach the maximum activity until May 2013.

“The current prediction for Sunspot Cycle 24 gives a smoothed sunspot number maximum of about 89 in May of 2013. We are currently almost three years into Cycle 24,” Nasa writes.

Solar activities and market cycles

Can nature’s cycles enrich our finance and market theories?

Market predictions based on the alignment of the sun, moon and the earth and other cycles could help investors stay disciplined and profit in economic storms, says Daniel Shaffer, CEO of Shaffer Asset Management.

SPACE/SUN

Shaffer writes that sunspot activities show that the sun has an approximate 11-year cycle and as of March 31, 2009, sunspot activity has reached a 100-year low (this, interestingly, coincides with a cycle low in equity markets, reached sometime mid-March in 2009).

But a low in solar activity seems to be followed by a high. Scientists are predicting a solar maximum of activity in sunspots in 2012 that could e the strongest in modern times, according to Shaffer.

The final frontier market

The present may be pretty bleak for investors, but that has not stopped one firm from looking decidedly at the future – privatised space travel. Fortis Investments reckons space tourism will one day become all the rage with travellers willing to fork out thousands upon thousands of dollars for the adventure.

SpaceIn the latest issue of Fund Expert magazine, Fortis looks at the nascent industry and reckons that the price of a space trip – roughly $200,000 to begin with – should come down substantially as a result of competition. There is already some – including Virgin Galactic, which is aiming for launch by next year, and Rocketplane, which should go up the year after.  They will start modestly, just sticking their noses out of the atmosphere.

The new industry, however, eventually should mean a boom in new employment, requiring commercial astronauts, flight attendants, tour operators and so on. But the flight operators may also be licking their lips at the prospect of getting government military and scientific research contracts. Fortis – whose Brussels headquarters coincidently is located on Avenue de l’Astronomie — reckons that a NASA flight currently costs the U.S. government $1.3 billion a pop. So outsourcing would be attractive.