According to a study recently published in the Journal of Financial Research, not long after construction begins on a number of large buildings or they are actually finished, the stock market goes into the dumpster.

Its author, Guenter Loffler, a professor of finance at Ulm University in Germany, studied the correlation between skyscraper construction and stock market trends from 1871 to 2009.

He told the newspaper Real Estate Weekly recently that skyscraper construction is a better predictor of stock prices than more commonly used indicators, such as corporate profits or price/earnings ratios.

He offers plenty of examples.

In 1929, the Chrysler Building was under construction, while work was about to begin on the Empire State Building. This was an era that Real Estate Weekly considers to be “the greatest skyscraper boom in history.”

The stock market crashed later that year.

In 1993, construction began on the world’s tallest building, the Petronas Towers located in Kuala Lampur, Malaysia. Before its doors were opened, this super skyscraper was engulfed in the Asian Financial Crisis that sent stocks sinking around the world.

Fourteen years later, in 2007, construction began on what was slated to be the tallest building in the Western Hemisphere, the Chicago Spire. Like in the past, this was just one of the many towers being erected at that time. Indeed, the total square footage underway in 2007 was more than twice the average of the previous 20 years, writes Prof. Loffler.

As you might recall, the stock market peaked in October of that year and worked its way lower before plunging in September, 2008. The Spire was postponed indefinitely, as were a number of other buildings.

http://www.marketwatch.com/story/building-boom-signals-stock-market-bust-2014-03-04?siteid=yhoof2