Super Bowl Indicator and Stock
Are you planning your Super Bowl now? When the clock is ticking, market historians remind us that Super Bowl winners can give clues. On how the stock market will work in 2022.
The Super Bowl Indicator was created in 1978 by Leonard Copet, a sports writer for the New York Times. At first it was a trivial theory, it showed amazing teeth in the last 44 years, a fairly impressive rate of accuracy. What is this rule? Crowded.
The Super Bowl Indicator says the Dow Jones Industrial Average will end the year with a positive return if the National Football Conference (NFC) – or a team of original NFC roots – wins the Super Bowl. Conversely, this indicator warns that the DJIA will record losses at the end of the year if the American Football Conference (AFC) team wins the big game.
Looking back at the history from 1967-2015, the Super Bowl index reveals an accuracy rate of 82%. That, in fact, is better than flipping a coin.
While this may be an interesting statistic, Wall Street experts have explained that there is no real connection between Super Bowl and stock market performance.
A simple rule of thumb: Mutual relations do not equalize.
Sorry to disappoint, but the past performance of the Super Bowl indicator is just a coincidence. In fact, it would be a real coincidence if the stock market ended the year with losses and Cincinnati Bengals took home the trophy on Sunday.
For you, as an investor, it’s a relationship that’s really important. And, in the case of diversity – unrelated resources – such as physical gold – there is a way you can protect your blind side.
Lack of correlation of gold with other assets is one of the strengths of your portfolio. No- or low-relationship means, for example, when the stock crashes, gold usually rises.
For optimal risk-consistent performance, the traditional 60% stock – 40% bond portfolio should be set instead of 60% stock, 5% bond and 35% gold, according to Graniteshare research. Adding gold to the portfolio increases the annual portfolio return.
Last month’s January stock market losses revealed how vulnerable equities are to liquidation.
It may be time to strengthen your defensive package. This is still the first down of the year for your portfolio. There is still time to round out your bench with statistically significant variations – such as increasing your allocation to physical gold.
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