Tatton Teaser

Posted 9 February 2024

Cracking the Zodiac Code: will the dragon hoard wealth or breathe fire on investments?

The new Chinese Celestial Year is approaching so as part of the occasion we took a look at the Hang Seng Index, exploring annual returns through the lens of the twelve creatures that took part in the Jade Emperor’s celestial race. Our results? A fascinating mix of myth and money.

During the race, the nimble Rat outsmarted the mighty Ox to dash across the celestial river to claim the top spot. Our analysis reflects a similar twist. In investment terms, Rat years also topped the charts by ranked simple average, meaning consistent year-on-year gains (though this is somewhat skewed by the Rat’s 220% gain in 1972!). However, the clever Monkey emerges victorious when looking at cumulative returns – a steady climb to ultimate prosperity.

It’s tempting to draw parallels to the legend. Rat, small but quick-witted, navigates market fluctuations with agility, although subject to volatility. Monkey, resourceful and adaptable, plays the long game, accumulating wealth over time.

But what about the Snake, coincidentally last in the race and the Index? While the legend paints Snake as sly and opportunistic, our analysis suggests other factors might be at play. Perhaps Snake years coincide with broader economic downturns, that would test even the most astute investors.

Remember, the Jade Emperor’s Race wasn’t just about speed, but also about resourcefulness and collaboration. The Rooster, Goat, and Monkey shared a raft, demonstrating the power of cooperation. Similarly, savvy investors rely on diversification, technical analysis, and a healthy dose of patience – qualities not exclusive to any one creature in the Chinese Zodiac.

However, turning to the new Year of the Dragon, a creature symbolizing power, ambition, and the potential for great feats. While our data places Dragon in the middle of the pack historically, both for simple averages and cumulative returns, its fiery spirit suggests an era of potential breakthroughs and bold moves. Could the Dragon, often seen as a risk-taker with a knack for innovation, usher in a year of significant change and opportunity?

Whether you’re a cunning Rat, a patient Monkey, or a fiery Dragon ready to soar, remember that while the Zodiac offers a playful lens through which to examine market trends, it is not a blueprint for future returns. Ultimately, individual preference, prudent risk management, and a long-term mind-set are more fundamental to long-term success.

Thanks to Anthony Graham and Eli Stubley for the ‘analysis’.

Subscribe to the Tatton Weekly Email

Get the latest news from Tatton HQ directly into your inbox every week. Packed with industry insights, our weekly mailing will keep you informed on the latest news from Tatton and beyond.

You can unsubscribe at any time by clicking the link in the footer of our emails. For information about our privacy practices, please click here.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp’s privacy practices here.

Important notice:

The Tatton Weekly is provided for information purposes only and compiled from sources believed to be correct but cannot be guaranteed.  It should not be construed as an offer, or a solicitation of an offer, to buy or sell an investment or any related financial instruments. Any opinions, forecasts or estimates constitute a judgement as at the date of publication and do not necessarily reflect the views held throughout Tatton Investment Management Limited (Tatton). The Tatton Weekly has not been prepared in accordance with legal requirements designed to promote independent investment research. Retail investors should seek their own financial, tax, legal and regulatory advice regarding the appropriateness or otherwise of investing in any investment strategies and should understand that past performance is not a guide to future performance and the value of any investments may fall as well as rise and you may get back less than you invested.

Any reader of the Tatton Weekly should not use it as a guide or form the basis of a decision relating to the specific investment objectives, financial circumstances or particular needs of any recipient and it should not be regarded as a substitute for the exercise of investors' own judgement or the recommendations of a professional financial adviser. The data used in producing the Tatton Weekly is for your personal use and must not be reproduced or shared.

Please select all the ways you would like to hear from Tatton Investment Management: