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valunvesthere (< 20)

Super Bowl Indicator (Super Bowl Rule), Difference Between January Barometer and January Effect.

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January 29, 2014 – Comments (3)

Investopedia - Super Bowl Indicator

Definition of 'Super Bowl Indicator'

An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in the stock market for the coming year, and a win for a team from the old NFL (NFC division) means the stock market will be up for the year.

Investopedia explains 'Super Bowl Indicator'

Though historically speaking the Super Bowl indicator boasts an 80% accuracy rate, remember the old maxim: correlation does not imply causation. In 2008, despite the New York Giants (NFC division) winning the Super Bowl (indicating a Bull Market), the stock market suffered one of the largest downturns since the Great Depression. Though the indicator is an interesting take on predicting the stock market, by no means should the correlation dictate an individual's portfolio construction.

The Free Dictionary by Farlex - Super Bowl Indicator

Super Bowl indicator

A theory that if a team from the old American Football League pre-1970 wins the Super Bowl, the stock market will decline during the coming year. If a team from the old pre-1990 National Football League wins the Super Bowl, stock prices will increase in the coming year.

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Super Bowl Rule

An indicator that few follow seriously stating that a Super Bowl win by an NFC team will result in a market uptrend for the coming year, while a win by an AFC team portends a downtrend. The Super Bowl indicator has been correct more than four years out of every five, but most believe this to be simply coincidence.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Wikipedia - Super Bowl indicator

Super Bowl indicator
From Wikipedia, the free encyclopedia

The Super Bowl Indicator is a superstition that says that the stock market's performance in a given year can be predicted based on the outcome of the Super Bowl of that year. It was "discovered" by Leonard Koppett in the '70s when he realized that it had never been wrong, until that point. This pseudo-macroeconomic concept states that if a team from the American Football Conference (AFC) wins, then it will be a bear market (or down market), but if a team from the National Football Conference (NFC) wins, then it will be a bull market (up market).

Accuracy

The indicator has been correct 33 out of 41 times, as measured by the Dow Jones Industrial Average – a success rate of over 80%. However, since a particular football league winning a Super Bowl and the US Stock market have no real connection this is just a coincidence. Therefore there is no reason to expect it will work as a predictor of future bull markets.

Investopedia - January Barometer

Definition of 'January Barometer'

A theory stating that the movement of the S&P 500 during the month of January sets the stock market's direction for the year (as measured by the S&P 500). The January Barometer states that if the S&P 500 was up at the end of January compared to the beginning of the month, proponents would expect the stock market to rise during the rest of the year.

Investopedia explains 'January Barometer'

If an investor believes in the ability of the January Barometer to predict the equity market's performance, he or she will only invest in the market in the years when the barometer predicts the market will rise, and stay out of the market when it forecasts a market pullback.

While the January Barometer has been seen to produce better than 50% accuracy rates during 20-year periods, it is difficult to produce excess returns by using it because the improved performance by staying out of the market during bad times can be more than offset by larger losses incurred when the barometer incorrectly predicts a bull market. 

The Free Dictionary by Farlex - January Barometer

January Barometer

A theory stating that the performance of the S&P 500 in January predicts its performance for the remainder of the year. That it, if the S&P ends January higher than it began, there will be a rising stock market and vice versa. Investors using the January barometer make investment decisions based on this performance; they buy S&P 500 stocks when performance is strong in January and sell when it is not. The January barometer has had mixed results over the years.
 

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Investopedia explains January Barometer

If an investor believes in the ability of the January barometer to predict the equity market's performance, he or she will invest in the market only in the years when the barometer predicts that the market will rise and stay out of the market when it forecasts a market pullback. Although the January barometer has been seen to produce better than 50% accuracy rates during 20-year periods, it is difficult to produce excess returns by using it because the improved performance resulting from staying out of the market during bad times can be more than offset by larger losses incurred when the barometer incorrectly predicts a bull market.

Wikipedia - January barometer

January barometer
From Wikipedia, the free encyclopedia

The January barometer is the hypothesis that stock market performance in January (particularly in the U.S.) predicts its performance for the rest of the year. So if the stock market rises in January, it is likely to continue to rise by the end of December. The January barometer was first mentioned by Yale Hirsch in 1972.Historically, if the S&P 500 goes up in January, the trend will follow for the rest of the year. Conversely if the S&P falls in January, then it will fall for the rest of the year. From 1950 till 1984 both positive and negative prediction had a certainty of about 70% and 90% respectively with 75% in total. After 1985 however, the negative predictive power had been reduced to 50%, or in other words, no predictive power at all.

Investopedia - January Effect

Definition of 'January Effect'

A general increase in stock prices during the month of January. This rally is generally attributed to an increase in buying, which follows the drop in price that typically happens in December when investors, seeking to create tax losses to offset capital gains, prompt a sell-off.

Investopedia explains 'January Effect'

The January effect is said to affect small caps more than mid or large caps. This historical trend, however, has been less pronounced in recent years because the markets have adjusted for it. Another reason the January effect is now considered less important is that more people are using tax-sheltered retirement plans and therefore have no reason to sell at the end of the year for a tax loss. 

The Free Dictionary by Farlex - January Effect

January effect

Refers to the historical pattern that stock prices rise in the first few days of January. Studies have suggested this holds only for small-capitalization stocks. In recent years, there is less evidence of a January effect.
 

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

January effect

The tendency of stocks to perform better in January than at any other time of the year. Some analysts speculate that the stock market tends to become oversold in December when investors sell to establish losses for tax purposes or to obtain money for holiday spending.Case Study One investment strategy that uses stock index futures or stock index options to profit from the January effect assumes that equities of small firms continue to outperform equities of large firms during the early part of each calendar year. Using this strategy, an investor could take advantage of the higher returns offered by small-caps by purchasing options or futures on the Value Line Composite Index, which includes more than 1,700 stocks, and simultaneously selling options or futures on a blue chip index such as the S&P 500 or the Major Market Index. This spread should produce a profit regardless of an increase or decrease in the overall market so long as small-caps outperforms large-caps. This same spread will be a losing investment if the January effect doesn't hold and small-caps underperforms large-caps.
 

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved.

January Effect.

Each year, the stock market tends to increase slightly in value between December 31 and the end of the first week of January.

Known as the January effect, this rise starts when investors sell underperforming stocks at year-end to claim capital losses on their tax returns.

After the new tax year begins on January 1, the same investors tend to reinvest the money from those sales, heightening demand temporarily, and making the overall market rise slightly during that week.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

Wikipedia - January effect

January effect

From Wikipedia, the free encyclopedia

The January effect is a seasonal anomaly in the financial market where securities' prices increase in the month of January more than in any other month. This creates an opportunity for investors to buy stocks for lower prices before January and sell them after their value increases.
Therefore, the main characteristics of the January Effect are an increase in buying securities before the end of the year for a lower price, and selling them in January to generate profit from the price differences.

The recurrent nature of this anomaly suggest that the market is not efficient, as market efficiency would suggest that this effect should disappear.

The effect was first observed in, or before, 1942 by investment banker Sidney B. Wachtel. It is the observed phenomenon that since 1925, small stocks have outperformed the broader market in the month of January, with most of the disparity occurring before the middle of the month.

When combined with the four-year presidential cycle, historically the largest January effect occurs in year three of a president's term.

The most common theory explaining this phenomenon is that individual investors, who are income tax-sensitive and who disproportionately hold small stocks, sell stocks for tax reasons at year end (such as to claim a capital loss) and reinvest after the first of the year. Another cause is the payment of year end bonuses in January. Some of this bonus money is used to purchase stocks, driving up prices. The January effect does not always materialize; for example, small stocks underperformed large stocks in January 1982, 1987, 1989 and 1990.

3 Comments – Post Your Own

#1) On January 30, 2014 at 12:01 AM, Húshuobadào (34.33) wrote:

Seattle, Denver art museums wager loans of art on Super Bowl outcome

By Kevin Griffin, Vancouver SunJanuary 29, 2014 1:59 PM

The Broncho Buster, Frederric Remington, 1895.

Nuxalk mask, 1880.


The Seattle Art Museum is wagering a three-month loan of a Nuxalk raven mask from B.C. against a statue of a bucking bronco from the Denver Art Museum on the outcome of Sunday’s NFL Super Bowl game in New Jersey.

The Seattle Art Museum is betting an impressive Nuxalk mask that has a long bird beak with a fierce look on its face. It is reminiscent of its famous Seahawk relative that snaps tight on the offence of opposing teams.

Painted in black, red and blue, with long, shredded bark hanging down from its back, the mask dates from the 1880s. It would have been used as part of elaborate Northwest coast dance-dramas.

How tough is the Nuxalk mask?

Tough enough to suggest, according to the Seattle museum, the “ferocity of this bird of prey.”

The mask is from the Nuxalk First Nation, located in and around Bella Coola on B.C.’s north-central coast.

Up against the snapping bird is Denver Art Museum’s The Broncho Buster, a bronze icon of the American west by Frederic Remington.

Dating from 1895, the sculpture is meant to symbolize the spirit and tenacity of the Wild West.

The art wager is the idea of Kimerly Rorschach, the Seattle Art Museum’s director and CEO.

“We didn’t seek the team’s permission in doing this, but we let them know and they were delighted,” she said.

Rorschach is confident that The Broncho Buster will be travelling north to Seattle on loan so that the so-called “12th man” can see it, she said in reference to the Seattle Seahawks’ notoriously loud fans.

Earlier this month, the Seattle museum linked itself to the “12th man” when it projected the number 12 on its landmark sculpture Hammering Man, located in front of the museum.

Although other art museums have wagered artwork loans on the outcome of previous Super Bowls, none of the works have so closely matched the team logos as the two works at stake this Sunday.

Rorschach describes herself as a fan who understands the basics of the game.

“I love the narrative of football,” she said in a phone interview. “Basketball is too fast, baseball too slow. But football has this majestic, dramatic unfolding narrative on the field. I do enjoy the games, and like everyone, am excited about the game.”

kevingriffin @ vancouversun . com

© Copyright (c) Postmedia News

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#2) On February 02, 2014 at 10:21 PM, valunvesthere (< 20) wrote:

comment #1

The Seattle Art Museum is wagering a three-month loan of a Nuxalk raven mask from B.C. against a statue of a bucking bronco from the Denver Art Museum on the outcome of Sunday’s NFL Super Bowl game in New Jersey. 

The Seattle Seahawks won 43 to 8. 

lol, looks like the Broncho Buster is heading to the Seattle Art Museum on a three months vacation.

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#3) On February 03, 2014 at 1:51 AM, Húshuobadào (34.33) wrote:

valunvesthere 

Investopedia explains 'Super Bowl Indicator'

Though historically speaking the Super Bowl indicator boasts an 80% accuracy rate, remember the old maxim: correlation does not imply causation. In 2008, despite the New York Giants (NFC division) winning the Super Bowl (indicating a Bull Market), the stock market suffered one of the largest downturns since the Great Depression. Though the indicator is an interesting take on predicting the stock market, by no means should the correlation dictate an individual's portfolio construction.

Hopefully in 2014 the Seattle Seahawks (AFC division) winning the Super Bowl (indicating a bear market), the stock market will experience record breaking advances in the history of the stock markets.

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