With the heart of college basketball’s biggest tournament set to kick-off tomorrow, you can bet that a lot of traders will be looking to make sure they have access to the games at their desks (or via their phones). Before the age of mobile devices and streaming, it used to be that if you wanted to watch the afternoon games in the first two days of the NCAA Tournament, you had to sneak away from the desk and head out to a bar that had the games on. It was also a simpler time when the games were only on one-channel, and people didn’t have to frantically search for what channel TruTv was on their cable provider.
Because a lot of the first round’s games take place during the day, there have been all sorts of studies done estimating the loss in worker productivity that takes place as a result of people shifting their attention from work to the games. According to one estimate, the aggregate amount of worker productivity lost because of the games amounts to $6.3 billion for the entire month of March. In the stock market, we wondered whether volumes are impacted by people taking time out of the trading day to watch the games. To check that, we looked at US equity market volumes on the Wednesday, Thursday, and Friday of the week when the first round of the NCAA Tournament is played and calculated how those levels compared to average volume over the prior 50 trading days.
Looking at the results, there doesn’t seem to be a whole lot of evidence that Wall Street shuts down during the NCAA Tournament. In fact, quite the contrary. Going back to 2004, volumes on day one and two of the tournament are above average more often than they are below average. Overall, average volume the day before the tournament starts is 3.5% above average (median: +1.9%). On the first day of the tournament, volumes are typically 5% above average (median: 2.7%), and then on day two of the tournament, average volume is 20.6% above average (median: 17.7%). One reason for the Friday spike in volume, however, is due to the fact that it also tends to be an options expiration day. Whatever the reasons, the idea that Wall Street shuts down during the first two days of the tournament is not borne out in fact.
There are several possible explanations for the pickup in volume during the first two days of the tournament. The first is that the games may actually give salespeople an excuse to call a particular client and talk about how the team of their customer’s school is doing and then get a trade done in the process. The second, and sadly, probably more likely reason is that all the trading these days is done by computer anyways, so what do they care if there are games going on?