Attention Canadian investors: You really want the Pittsburgh Penguins to win the Stanley Cup.
Brock University Prof. Ernest Biktimirov found that when an Eastern Conference team, such as the Penguins, wins the Cup, Canadian stocks tend to post a gain on the year. A Western Conference win hails a down year. The data is far from complete - it only goes back to 2000. But it's been correct six out of seven times, giving it an 85.7-per-cent success rate this decade.
For the record - the Penguins trail the Detroit Red Wings 2-1 in a best-of-seven series, as of Wednesday.
Prof. Biktimirov included the reference in a new finance textbook he authored, and acknowledged it's a pretty lightweight measure. But, he points out that Americans are fond of using the Super Bowl indicator (which says if a team from the old American Football League wins, then the markets will go down that year), and there's no reason Canadians shouldn't have a barometer of their own.
Here's a ridiculously unscientific update on some other ridiculous market gauges:
Super Bowl: The Pittsburgh Steelers won, but the results didn't matter, according to the Super Bowl theory. That's because Pittsburgh and the Arizona Cardinals both have their origins in the National Football League (not the old American Football League), so regardless of the outcome the markets should finish higher in 2009. This theory has worked out 85 per cent of the time.
Bikinis: Some indicators are sexier than others - the Sports Illustrated Swimsuit Issue gauge tries to quantify the effect of the cover model's nationality on the average performance of the S&P 500 over the past 30 years. Americans appeared on the cover 15 times, with the S&P 500 posting an average gain of 13.9 per cent with 13 positive years. The other 15 times, with non-Americans on the cover, the S&P 500 gained an average 7.2 per cent with 11 positive years. The good news? This year's cover features Bar Refaeli. The bad news? She's from Israel.
Skirt lengths: This theory holds that the prevailing skirt length is a strong indicator of consumer confidence. The idea is that a short skirt can't be altered, whereas a long skirt's length can be changed several times to accommodate different seasons and fashions. Therefore, a confident consumer is one with a short skirt. Surprisingly, very little credible research has been done to test this theory - but judging from a recent walk down Toronto's Queen Street West, consumers are very confident indeed. Very, very confident.
Presidential cycle: Markets are supposed to do well in election years and slump when the new guy takes over. Hong Kong professor Wing-Keung Wong released a paper last year that seems to lend some weight to the theory, saying that "in the almost four decades from January, 1965, through to December, 2003, U.S. stock prices closely followed the four-year presidential election cycle. In general, stock prices fell during the first half of a presidency, reached a trough in the second year, rose during the second half of a presidency, and reached a peak in the third or fourth year." Critics charge that the sample size is too small, and last year did some damage to the numbers with the S&P 500 losing 37.5 per cent despite a vigorous campaign.
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