One of the enduring myths in finance is that markets are ruthlessly efficient, powered by sober institutions running disciplined processes. The reality, as the paper “The Morning After: Late-night TV and the Stock Market” by Cheema et al (available on SSRN), is that sometimes the only thing moving the S&P 500 is Stranger Things dropping at 3 a.m.

The authors examine something both obvious and almost invisible: how sleep loss from binge-watching late-night TV affects next-day stock returns. With streaming platforms dumping entire seasons at midnight, millions of people, investors included, stay awake far too long. The result is a remarkably consistent pattern: the stock market falls the morning after popular late-night releases.

Over ten years of data, releases of the most watched Netflix, Hulu, and Amazon shows are associated with a 0.25% decline in the S&P 500 the next day. Given that there are roughly ten such days per year, that’s a cumulative 2.5% annual drag—driven purely by sleep deprivation. Not macro forces, not earnings, not information. Just fatigue.

What makes the paper especially compelling is the more generally applicable mechanism behind the effect.

The authors make a simple but important point: buying requires cognitive effort. Initiating a long position means evaluating the future—processing macro data, adjusting earnings expectations, and updating a model. Selling is easier: trimming exposure, lightening risk, exiting a stale position. It’s backward-looking and heuristically driven.

When you’re tired, you conserve effort. You avoid cognitively expensive choices. So sleepy investors do not initiate new positions; they do the easy thing—they sell.

This creates an imbalance: lots of low-effort selling, little high-effort buying. Prices drift down. It’s not dramatic, but it’s systematic.

This matches a growing body of research showing that fatigued analysts produce lower-quality forecasts, exhausted decision-makers become more loss-averse, and cognitive load pushes people toward simple, habitual actions. Buying is work. Selling is autopilot.

A natural hypothesis is that sleep-deprived traders simply stay away, thinning liquidity. But the data rejects that: no drop in volume, turnover, spreads, or price impact. Odd-lot activity doesn’t budge. Algo participation stays stable. The effect isn’t retail noise, and it isn’t reduced liquidity. It is professional investors being just tired enough to cut corners.

Researchers have previously tried to proxy sleep loss with the daylight savings time shift, showing mild negative returns following the “spring forward” clock change. But that proxy is weak:

• it happens only once per year,
• it happens at different times in the US, continental Europe and the UK
• it introduces all kinds of confounds (seasonal effects, macro timing, regional differences).

By contrast, streaming releases happen dozens of times, with clean timestamps, measurable popularity, and no competing macro noise. That makes binge-watching a far more reliable lens into how sleep loss affects markets.

The easy critique is: only a small percentage of institutional traders are staying up late, so who cares?

But markets do not require a huge population to nudge prices.
They require imbalances, even tiny ones, acting consistently.

A very small cognitive skew—fewer buyers, slightly more sellers—can tilt prices amid the natural noise of daily market making. Most of the time, the market is a sea of randomness with structure appearing only at the margins. When a small but reliable signal enters that sea, it doesn’t have to be big to matter. It just has to be repeatable and uncorrelated with other drivers.

This is one of those cases.

This paper’s real contribution is showing how fragile the market’s “rationality” is. Prices are set by humans operating with limited cognitive bandwidth, and sometimes the most powerful predictor of next-day returns is whether those humans stayed up too late watching TV.

For traders, the message is simple:

• Edges often emerge from predictable human frailty.
• Institutional investors are not machines.
• Effort is a scarce resource, and when it drops, markets behave differently.

And sometimes, the market’s morning mood depends on how many people were awake at midnight for a Netflix premiere.

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