Weekend Reads for Investors: The Super Bowl Indicator
This weekend approximately half of US households will be watching the Denver Broncos and Seattle Seahawks compete in the 48th edition of the National Football League’s Super Bowl. It is typically a time when stock market observers cast seriousness aside and consider what the game’s outcome will mean for equity prices by examining the Super Bowl Indicator. First proposed in 1978, this theory holds that stocks will rise in the coming year if an original NFL (pre-merger with the American Football League in 1970) franchise wins, but will fall if an old AFL team wins.
In its history, this signal has correctly called the direction of the broad market roughly 80% of the time. However, discerning investors will distinguish correlation from causality and instead focus on simply enjoying the game. For the record, neither Denver nor Seattle is an original NFL franchise, which portends a down year for stocks, no matter the outcome.
Here are some stories you may have missed in recent weeks:
Behavioral Matters
- Loss aversion, framing, and football. (Sports On Earth)
- Confessions of a wealth addict. (The New York Times)
Strategic Thinking
- Samuel Lee on the viability of imitating the pros as an investment strategy. (Morningstar)
- A slow growth economy and the outlook for mergers and acquisitions. (Institutional Investor)
- Big tobacco may be running out of puff. (The Economist)
- “European Equities: In the Market with an Airbag” (Context)
High Profiles
- Hedge fund legend Michael Steinhardt as a 21st-century Charles Schwab? (Forbes)
- Tracy Britt Cool is Warren Buffett’s top troubleshooter. (Businessweek)
- Are Harvard and Yale overpaying their money managers? (Bloomberg)
- Wally Weitz on value investing. (Forbes)
Shareholder Values
- Jeff Matthews takes IBM to task over earnings (Jeff Matthews Is Not Making This Up)
- The mythical obligation to maximize shareholder value. (Naked Capitalism)
- Third Point’s fourth quarter 2013 investor letter lays out their case for a breakup of Dow (Third Point LLC, PDF), and Dow’s response is less than enthusiastic. (Financial Times)
- Aswath Damodaran on university moats and online barbarians. (Musings on Markets)
Emerging Markets
- Value investor Prem Watsa is bullish on India’s growth prospects. (The Economic Times)
- This isn’t 1997 all over again for emerging markets. (Fortune)
Odds & Ends
- “Has Anyone Ever Flipped Heads 76 Times in a Row?” (Scientific American)
- Warren Buffett and Quicken Loans will pay $1 billion for a perfect March Madness bracket. (The Washington Post)
Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.
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