A CNBC analyst explores the superstition surrounding Philly sports victories and stock market drops, ultimately concluding that portfolio performance is unrelated to the outcome of sporting events.
As a resident Eagles fan for CNBC, I was shocked to discover an email chain this week with the subject line, 'Why the Bulls Hate the Birds.' The year 1929 saw both the Philadelphia Athletics win the World Series and the stock market crash. Similarly, 2018, the year the Eagles won their first Super Bowl , coincided with the worst year for stocks since 2008. 'Who should you root for?' Look, I don't expect anyone to side with Philly fans. I own a Jason Kelce t-shirt that says, 'No one likes us.
We don't care.' I get it, we're obnoxious. But if you're backing the Chiefs this time, don't do it because you're afraid of your portfolio taking a hit. After all, this whole thing about Philly sports victories and stock market slides is just the latest in a long line of stock 'indicators' that market experts throw out there for fun— sometimes to add a bit of spice to otherwise dry analysis. And those of us who write about these things like to spice things up every once in a while with fun little nuggets of data from stock market history.Sure, you could pay attention to what the Federal Reserve is doing. But what if you could predict the future in a different way? Consider the so-called hemline indicator, which suggests that skirt styles tend to be shorter during bull markets (think the Roaring 20s, the booming 80s) and dresses get more modest during economic downturns. Maybe this weekend, the event to watch isn't the Super Bowl, but New York Fashion Week. Or you can ignore it all if you believe in the January barometer. This market truism suggests that the stock market's calendar year results tend to follow what stocks did in January. That's good news this year; the S&P 500 rose by about 3% in the first month of the year. However, the historical correlation is aided by the fact that the market has historically trended upward, period. Stocks have produced positive calendar year returns 71% of the time since 1945, including 14 out of 29 times they declined in January. As any of the stories related to these indicators will remind you: past performance is no guarantee of future results. Even if any of these indicators were reliable predictors of stock market movements in the past (they weren't), no one can tell where investments are headed in the future. And even if you believed in these sorts of things, the evidence against Philly sports is flimsier than it looks. Sure, the Phillies won the title in 2008, and that was a famously bad year for stocks. The Global Financial Crisis and associated bear market started in 2007, and the World Series is famously played in October. And the 2007-2009 bear market ended less than six months after the Phillies won, in March 2009, so you could also argue they helped turn things around. Also, why just the World Series and the Super Bowl? Should we not consider the Sixers' title in 1983, a year that saw a 17% climb in the S&P 500? What about 1975? The year the Flyers hoisted their second Stanley Cup, the market rose by 32% (following a 30% decline, but who's counting?). Plus, as Detrick points out, the classic Super Bowl indicator tells us that the market tends to favor winners from the NFC over the AFC. That would favor the Eagles, though the last two years following Chiefs titles have been pretty spectacular for investors. So what is the neutral fan to make of all this? Detrick would be the first to tell you: nothing. Your portfolio doesn't move based on how long dresses are or who wins sporting events. So feel free to pick a team based on uniform color or quarterback attractiveness or your feelings on Taylor Swift. Simply put, if the market tanks, it won't be because the Eagles lifted the Lombardi Trophy on Sunday. So say it with me: go birds
Stock Market Super Bowl Philly Sports Eagles Indicators Superstition Portfolio
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