On Fri, Feb 01, 2002 at 10:34:27AM -0800, Kevin Robert Dean wrote:
> How to Pick 'Em
> Your Guide to Buying Stocks:
> the Super Bowl?
>
> By Peter Dizikes
>
> http://abcnews.go.com/sections/business/DailyNews/superbowl_dowjones020201.html
>
> N E W Y O R K, Feb. 1
> — The St. Louis Rams play the New England Patriots in
> the Super Bowl. The Bulls and Bears continue to battle
> on Wall Street. What's the connection?
>
> Well, at least one person thinks the result of Super
> Bowl XXXVI could tell you all you need to know about
> the stock market for the rest of 2002.
> That would be Professor Thomas Kreuger of the
> University of Wisconin-LaCrosse, co-author of a survey
> showing a strong correlation between the outcome of
> the Super Bowl and the direction of the Dow Jones
> Industrial Average, the world's best-known stock
> index. Indeed, Kreuger lets the Super Bowl guide his
> investment strategy.
>
> The indicator shows that when the winner comes from
> the National Football Conference (or is an AFC team
> from the pre-merger NFL, like the Steelers or Colts),
> the Dow Jones Industrial Average tends to rise during
> the year as a whole. To date, that has happened 22 of
> 25 times. But when the American Football Conference
> team wins, the Dow has fallen 7 of 10 years.
>
> Accounts vary about who first noticed the correlation;
> Krueger first published his survey, along with
> Professor William Kennedy of the University of North
> Carolina at Charlotte, in 1990.
>
> All told, though, the game has forecast the Dow's
> direction 29 of 35 years, or 83 percent of the time.
> Kreuger says that an indicator like that, no matter
> how apparently whimsical, is too telling to ignore.
>
> "The numbers don't lie," says Kreuger, a Green Bay
> Packers fan. "There must be some sort of relevance."
>
> A win by the NFC's St. Louis, a heavy favorite, would
> seem to augur well for investors in 2002. But would
> Kreuger really venture into the markets based on the
> outcome of a football game?
>
> "Let's assume the Rams win," says Kreuger. "I honestly
> have money sitting in cash accounts ready to invest on
> Monday."
>
> Standing on the Sidelines
>
> Kennedy, on the other hand, says that while he used to
> invest based on the Super Bowl, he no longer treats
> the correlation as a significant barometer.
>
> "The thing has been wrong three out of the last four
> years, and that blew my confidence," says Kennedy, a
> Carolina Panthers season-ticket holder. "I'm kind of
> skeptical now."
>
> Of course, there are other reasons to think the
> apparent connection is not meaningful. For starters,
> one could argue the whole thing is simply a
> coincidence based on a small statistical sample.
>
> The historic bull market of the 1980s and 1990s, after
> all, fell at the same time as an equally historic
> period of dominance for the NFC, which won thirteen
> straight Super Bowls from January 1985 through January
> 1997, behind the powerful repeat champions like the
> San Francisco 49ers, Washington Redskins and Dallas
> Cowboys.
>
> And as Krueger himself acknowledges, the Dow Jones
> rises on an annual basis more frequently than it
> falls. Find any non-financial phenomenon where one
> outcome happens more than half the time, and you can
> talk yourself into thinking you have a significant
> indicator on your hands.
>
> 'You Can't Even Spell Dow Jones'
>
> An additional warning to investors: the indicator does
> not guarantee that each of the 30 stocks in the Dow
> will go up, even if the index as a whole rises. And
> since the Dow's stocks have changed through over the
> years, in an attempt to keep the index current, even
> those intrigued by Krueger's correlation might be
> hard-pressed to name the Dow's components.
>
> Or, as Baltimore Ravens tight end Shannon Sharpe said
> to New York Giants defensive back Jason Sehorn in a
> recent commercial for Charles Schwab that,
> fortuitously, was airing well before their teams
> squared off in last year's game: "You can't even spell
> Dow Jones."
>
> So if your knowledge of the leading stocks is shaky,
> you might want to think twice before investing should
> the Rams, a two-touchdown favorite, blow the Patriots
> away.
>
> Despite all that, Kreuger remains buoyant about the
> indicator: "I'm confident the Rams will win, and I'm
> fairly confident the market will recover."
>
>
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> =====
> Kevin Dean
> Buffalo, NY
> ICQ: 8616001
> http://www.yaysoft.com
>
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-- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu