We don’t really know why we yawn. There are many theories - ranging from cooling the brain, to increasing alertness.
From a social and evolutionary biological perspective, contagious yawning may be to our advantage as it may serve as a way of syncing our psycho-physical states across social groups. A kind of bodily empathy.1
Simply described, our facial, head and neck muscles stretch to an apex and relax, as do our airway and lungs - gaping open 3-4 times their typical size.2 We stretch the limit of our countenance, of our breath. We then relax and reset. We sync with those around us.
Maybe markets yawn every summer. A gaping market maw of trends stretching beyond their typical limits, and traders sync into what they think is a new macro reality — only to then watch, exhausted and exasperated, as the market trends resume upon autumn’s arrival. (Though September is notoriously weak - at least for the S&P. October tends to be a turning point into the holiday season.)
If you’ve had a drawdown, and your portfolio has been chopping around - you’re in good company. Looking more deeply at the dollar can help keep us on track. IF we were entering a bull market for the US dollar - would the Colombian Peso be doing this?
Or the Chinese Renminbi, Brazilian Real, Mexican Peso…
Would the stocks of emerging markets be outperforming the S&P 500?
See the summer for what it is - a noisy period of lower liquidity where trends test their limits.
See the yawn for what it is - a signal to rest.
-Andy
ICYMI:
Friday 📸: Portfolio Review, Trades and Setups
Portfolio construction is something I continue to work on and evolve. As the account grows - we gain access to more uncorrelated assets. White sugar futures are a recent example - while the rest of the portfolio (which is essentially all the same trade of shorting the dollar without shorting the dol…
Seward, Liz (2007-09-10). “Sign of empathy”. BBC News.
Baenninger, R. (1997-06-01). “On yawning and its functions”. Psychonomic Bulletin & Review. 4 (2): 198–207