Why sleep is like the stock market by Prof. Michael Gradisar

Our resident sleep expert Prof. Michael Gradisar shares his thoughts on why sleep can be compared to the stock market by breaking it down into four phases. He provides an interesting perspective and findings in light of the current state of affairs in the world. 

We hope that this insightful piece will give you an inspiration to rethink your sleep habits and give you the confidence that you can improve your sleep quality no matter how difficult it may seem.

Let's jump in:

Most people know we’ve been studying sleep for decades, but learning doesn’t stop there. Indeed, we’ve taken an interest in the stock market over recent years.

And during this novel time, we’ve noticed some parallels between sleep and the stock market. So we’re going to speak to the similarities over 4 phases.

This has mainly been spurred by a comment mentioned in the business section of the news last night.

That is, a commentator speculating that we’ve:

  • seen the initial bear market due to the corona virus (note: a bear market means a continuous drop in the value of the share market. The reason the bear is used is because when bears attack they’re usually standing up and attack in a DOWNwards strike. The opposite is a bull market, as bulls dig deep, and then thrust UP with their horns to attack).

  • seen the uptake of people buying shares that are on sale

  • and that we may now be entering that slow burn, where the decline of the stock market will not be a quick drop, but a slow and steady decline over the coming months (possibly even longer).

Lets look at the first stage that we’ve already experienced


Not only was the virus itself novel, but so was the situation of self-isolation. Indeed, the early phase of the COVID-19 situation, where our lives changed nearly everyday as more and more restrictions were applied, brought with it an underlying sense of uncertainly. And it was likely that this uncertainty also ‘spooked’ investors in the share market - who were worried the future value of their shares were going to be worth less than they were now. So they sold en masse, driving share prices down.

Uncertainty is synonymous with unpredictability. And unpredictability fuels anxiety. Anxiety is a result of hyper-arousal. The body is on high alert - Reading the environment for any threats. A state of awareness that is in opposition to the one needed for sleep. Because in order to sleep, we need to let go of our environment. Make ourselves vulnerable.

Yet we do this each night, because we feel safe to do so. So during the PANIC phase, many people were acutely aware of threats to themselves. Not necessarily physical threats (like someone breaking into your house at night), but threats to their way of living (eg. loss of income).

The fear of the unknown can be powerful.

As the value of the share market declined during the PANIC phase, there was also a likely decline in the number of minutes people slept. Thanks to consumer technologies these days, there were recordings of people’s sleep en masse. Sleep is valuable. One could easily imagine the ‘share price’ of sleep declined.

And as people lose sleep, they make rash and emotional decisions. They take risks. When you’re an investor, you don’t want to make rash decisions.


Once people started to adapt and a bit of relief entered their bodies - like that moment on a roller coaster when the drop of the cart levels out - the benefits of the new way of living emerged.

Many people realised the stock market was on sale. Many may have realised they had a job, job security, and thus money to invest. And they lived the phrase uttered by the greatest investor of our time - Warren Buffett - to be “greedy when others are fearful”.


But perhaps they were a little premature. As Dr Mike Kemp notes, historically there is a little rebound when a significant decline in the stock market occurs. Yet previous data have shown that the bottom of the share market value occurs somewhere between 2 and 15 months. Historical evidence may be our best platform to predict when the bottom of the stock market occurs in 2020 (or 2021) - but given it’s ticked over the 2-month mark since the drop in the stock market - meaning we are now within the range of where the bottom should occur. It likely means we should hold onto our cash until we’re within the next phase.


After listening to the business analyst on the news last night, I recalled some data that we found in the very first sleep experiment I was involved in the late 1990s.

Part of the experiment was to get people to practice napping for a month.

Before and after they napped, we measured their circadian rhythm (aka, body clock). We did this by keeping them isolated in our sleep lab for an entire weekend and measuring different outputs (ie, measurements) from their body clock. We measured their skin temperature with an electrode on their finger, their internal temperature with …. perhaps that’s a story for another time … their ability to fall asleep with EEG electrodes, and their own ratings of sleepiness.

What we noticed is that before these guys and gals practiced napping there was a little dip in their body clock in the middle of the afternoon. It was pretty small, and in some of them, you’ll hardly call it a ‘post-lunch dip’ (by the way, it’s not caused by having lunch).

A month later this afternoon dip was much more pronounced!

And the participants in the study reported how easier it had become to nap. Whilst we might attribute this to learning, it looks like now they also had a biological reason driving their need for a nap.

How is this relevant to the present COVID-19 situation?

We’re all in an experiment, and the entire world is the sleep lab.

En masse, we’re changing our sleep behaviours. Taking a bit longer to get out of bed. Taking a bit longer to get moving in the morning. More tempted to lie down in the afternoon.

Our sleep is likely to slowly change over the coming months if we don’t hold on to what we use to do. And the driver of that could be biological. It could be that our underlying body clock, will change over the coming weeks and months. And the changes to our body clock will start to produce insomnia symptoms. And if these insomnia symptoms occur for long enough, it could turn into an insomnia disorder.

Many researchers have mobilised to collect sleep data during this novel time, and these data will confirm for us (or not) that the world - en masse - may slowly decline into insomnia.

And this insomnia slide may occur alongside the predicted slow decline of the value of the stock market.


History has shown us that the stock market cycles - just like our daily cycle of of our body clock - and eventually there will be a U-TURN, and the value of the stock market will increase.

This doesn’t happen naturally. It happens through human intervention.

Likewise, whilst sleep can be unlearned - it can also be re-learned - through human intervention.

Our body clocks are malleable. They can adapt. For example, when we fly half way across the world, eventually our body clocks adapt to the new ‘new’. Again, through human intervention. The way we behave, and sometimes by the way we think.

Likewise, the stock market moves up and down because of the way people think, and then behave (eg, buy, sell or hold).

If the business analyst on the news last night was right, and we are at the beginning of the DOWNHILL SLIDE, then we should be saving our cash - and as Scott Pape has been saying for years - be prepared (to buy … the right shares).

And if sleep parallels the phases of the stock market, then we need to prepare for the emergence of insomnia symptoms. Whilst many will climb out of insomnia, others will need human intervention.

Thus I am grateful that the world was prepared to help it climb outside of insomnia.

And this is because some founding fathers and mothers began to study, learn and teach us how to treat insomnia.

So thank you Dick Bootzin for taking what people were doing to treat alcohol dependence and apply it to insomnia (Stimulus Control Therapy).

Thank you Art Spielman for applying the theory of sleep homeostatic pressure to the treatment of insomnia (Sleep Restriction Therapy)

Thank you Charles Morin, Colin Espie, Allison Harvey (and many others) for developing cognitive therapy and promoting CBT for insomnia to all that would listen.

We are grateful.

Written by Prof. Michael Gradisar 

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