Trying to get rich quickly? Want to know if the markets going to be bull or bear this year?
Look no further than the "Super Bowl Indicator".
The theory is a Super Bowl win for a team from the AFC foretells a decline in the stock market and a win for the NFC means the stock market will rise in the coming year.
There is one big caveat ... it counts the Pittsburgh Steelers as NFC because that's where they got their start.
If you accept that caveat, it has been on the money 33 years out of 41 - an 80% success rate. Sounds good, right?
Come on ... you know better.
Here are some other "fun" stock market fallacies:
- January Indicator
- Aspirin Count Theory
- Hemline Indicator
- Sports Illustrated Swimsuit Indicator
- Men's Underwear Index
- Big Mac Index
Back to Reality
Rationally, we understand that football and the stock market have nothing in common. And we probably intuitively understand that correlation ≠ causation. Yet, we crave order and look for signs that make markets seem a little bit more predictable.
The problem with randomness is that it can appear meaningful.
Wall Street is, unfortunately, inundated with theories that attempt to predict the performance of the stock market and the economy. The only difference between this and other theories is that we openly recognize the ridiculousness of this indicator.
More people than you would hope, or guess, attempt to forecast the market based on gut, ancient wisdom, and prayers.
While hope and prayer are good things ... they aren’t good trading strategies..
As goofy as it sounds, some of these "far-fetched" theories perform better than professional money managers with immense capital, research teams, and decades of experience.
I have a thought experiment I often ask people that come into my office.
What percentage of active managers beat the S&P 500 any given year?
... Now, what percentage beat the S&P 500 over 15 years?
The answer is about 5% as of 2019 (and that's in a predominantly bull market), and I have to imagine it's only gotten worse in the past two years. That's significantly worse than chance. That means something they're doing is hurting, not helping.
via Gaping Void
There's simply too much information out there for us to digest, process, rank, and use appropriately.
Every second you spend looking at a market is a second wasted.
There are people beating the markets — not by using the Super Bowl Indicator ... they're doing it with more algorithms and better technology.
There will never be less data or slower markets.
Onwards.
2022 Predictions
About a month ago, I shared visualcapitalist's 2021 predictions to check how well they fared at the end of the year.
Honestly, the list was pretty good. It wasn't perfect, but you wouldn't expect it to be.
In that article, I asked this question:
With that, here are visualcapitalist's 2022 predictions:
via visualcapitalist
Let's be clear - most predictions are either vague and easily guessed (and therefore not helpful) or random conjecture.
But, there's value in prediction, and there's value in analyzing the data before you. The caveat is that prediction is better when it's applied to human nature and not the machinations of fate, and data can be a distraction if it's not being carefully curated and analyzed to remain relevant to your goals.
For example, I agree with their general direction for technology. Tech is continuing to grow in influence, and as Web 3.0, the blockchain, and AI mature as platforms for sub-technologies, I think their importance is only going to skyrocket.
Prediction can also be entertainment. I certainly catch myself looking for patterns and differentiators for everything from whether my meal is going to come to the table correctly, to who's going to win the Super Bowl.
I know the chances are low, but I still think it's going to be the Cowboys ...
Posted at 03:38 PM in Business, Current Affairs, Games, Ideas, Just for Fun, Market Commentary, Science, Sports, Trading, Trading Tools, Web/Tech | Permalink | Comments (0)
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