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’.