Objective information about financial planning, investments, and retirement plans

Denver Wins! Time to Go to Cash?

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The Denver Broncos just won Super Bowl 50 and its looking like Peyton Manning will go out a winner. Good news and a feel good story? Not for investors. The Super Bowl Indicator says a win by an AFC team is a bad omen for the stock market for the year. 

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Super Bowl Indicator

The Super Bowl Indicator says that if a team from the old American Football League (AFL) wins the Super Bowl that the stock market will finish down for the year.

This indicator has held true for 40 of the previous 49 Super Bowls played prior to this one, including the past seven years.

The New York Giants, one of the earliest teams from the NFL, won the Super Bowl in 2008 but as we all recall the stock market had its worst year since the Great Depression with the S&P 500 being down 37% for the year. I guess a little thing like the mortgage fueled financial crises trumps a “sure fire” stock market predictor like the outcome of the Super Bowl.

The January Effect 

The Stock Trader’s Almanac says that if the month of January is down then 75% of the time the stock market will be down for the year.

The January Effect says that stocks that were sold off in December for tax-loss harvesting purposes will rally in January when investors buy them at reduced prices.

With the S&P 500 and the Dow Jones Industrial Average both down over 5% for the month this clearly didn’t happen.

Time to go to cash? 

Clearly investors should not peg their actions to any type of indicator like the Super Bowl Indicator or any of the others of a similar nature that have cropped up over the years.

The best course for investors has always been to have a financial plan, have an investing strategy and stick to their plan.

The Bottom Line 

The Super Bowl Indicator is fun and part of the Super Bowl hype. At the end of the day there is really no correlation between the performance of the stock market and who wins the Super Bowl. Investors should invest based upon their goals, their time horizon and their risk tolerance. I will say this, however. The market will be way up in 2017 after my Green Bay Packers bring the Lombardi Trophy back to its rightful home, Lambeau Field. OK no predictions, I have no idea what the market will do after the Packers win (which is a sure thing, I hope).

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What I’m Reading NFL Conference Championship Edition

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Its conference championship weekend in the NFL. The winners of the two games on Sunday will play in two weeks in the Super Bowl.  The Indianapolis Colts play the New England Patriots in the late game.  The first game has my beloved Green Bay Packers visiting the defending champs the Seattle Seahawks.  A tough place to win so I’m hoping Aaron Rodgers and the rest of the team are up to the task.

While you are waiting for the game or if you are not into football here are a few financial articles I suggest for some good weekend financial reading:

Jim Blankenship tells us why Debt Consolidation Loans Don’t Work (But You Might Get it to Work For You!) at Getting Your Financial Ducks in a Row.

Ryan Guina asks When Will I Get My Tax Refund? 2014 Tax Year Refund Schedule at Cash Money Life.

Mike Piper answers Why is Currency Risk Bad? at Oblivious Investor.

Barbara Friedberg discusses Monthly Pension Or Lump-Sum: Which Is Better? At Investopedia.

Josh Friedman writes Pimco’s Assets Declined 10% in Quarter After Gross Exit at Bloomberg.

Cliff Goldstein discusses The best time to start taking Social Security at Market Watch.

Alan Roth warns Non-Traded REITs – Warning, Danger Ahead on the AARP Blog.

I continue in my role as a contributor to Investopedia and here are my most recent articles for them:

Why Retirement Advice Is Better But Still Lacking

How To Explain Portfolio Rebalancing To Clients

What To Do When Your Client Behaves Badly

How Financial Advisors Can Help Gun-Shy Investors

Enjoy the rest of your weekend.  Let’s Go Packers!

Please feel free to contact me with your questions. 

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