Wacky Market Indicators :: Wamhoff Financial & Accounting


Wacky Market Indicators

Matt_AThere are many times in our industry when we are castigated for taking things too seriously, so let us take some time to make some fun out of our industry at the expense of media statistics. Weird market indicators have given an interesting correlation to changes in the market for years, and I thought that even though they prove nothing of the market, they make for fun conversation.

Things like Butter Production in Bangladesh, Presidential Approval Ratings, Triple Crown Winners, Women’s Hemlines, and Super Bowl Winners have had an odd correlation to occurrences in the markets we invest. I will give you a few examples of which, but you must take these tongue-in-cheek as these are meant as quirky indicators that have no basis in any economic fact.

Calculating the difference year-over-year of butter production in Bangladesh and doubling that number has consistency with the gain or loss of the S&P 500 Index during the same timeframe.

The Dow Jones Industrial Average tends to soar when the approval rating of the President is lower, between 35% and 50%, while the same Dow Jones Average has been known to take a dive when a horse takes the Triple Crown.

The skirt length theory, which is as odd as it sounds, tends to be a lagging indicator. This theory suggests that as skirts get higher, the market goes higher and as skirts get longer, the market goes lower.

The final correlation to market change is to follow the Super Bowl Winner. In 80% of cases, the market has been higher when an old-school National Football League team wins the game as opposed to an American Football League team.

Have fun with these, they make light of our wacky, sometimes media driven market, but rest assured that future stock market performance will not be measured by the length of a skirt or a stick of butter. Long-term investors should be focused on staying invested with a focus on their personal performance objectives and risk tolerance.