AT WT Wealth Management, we produce a research white paper each month that we hope you find timely as it relates to current events and hot topics in the news. We do these to educate, empower and inform our clients. This month, we decided to produce a more tongue-in-cheek guide to some of our favorite whimsical stock market indicators. August was a difficult month for the markets, with China’s economic concerns contaminating equity markets around the world and our own S&P 500 giving back over 6%.

We have uncovered several stock market indicators that don’t receive their fair share of headlines. These random stock market indicators rely on the whims of a groundhog in Pennsylvania, the outcome of the Super Bowl, and the sign of the Chinese zodiac, among others, to predict the direction of the Dow Jones Industrial Average, for which we have used data dating back to 1900 in some cases.

Rose Bowl
Traditionally, the annual New Year’s Day Rose Bowl Game has featured a Pac-12 team against a Big Ten team (exclusively so, from 1947 to 2001). The market reacts favorably to traditional winners from one of these two conferences, having a particularly strong year when the Big Ten wins. But of the 100 Rose Bowl Games played thus far, there have been 16 winners that did not come from one of these two conferences. In these years, the market reacts poorly, averaging a 3.7 percent loss. The Pac-12’s Oregon Ducks won the 2015 Rose Bowl, which should be good news for the market.





Super Bowl
Played in January or February of every year since 1967, the Super Bowl matches a professional football team from the American Football Conference (AFC) — formerly the AFL — against a team from the National Football Conference (NFC) — formerly the NFL. The market is a football fan, and clearly prefers teams from the NFC. It is up an average of 10.4 percent during those 26 years, compared to an average gain of only 2.5 percent during the 22 years when the AFC team has won. The AFC’s New England Patriots won Super Bowl XLIX, so investors can expect muted market gains in 2015 according to this indicator.




Groundhog Day
The eyes of the world turn to Punxsutawney, Pennsylvania every February 2 for the annual Groundhog Day ritual. It is said that when Punxsutawney Phil sees his shadow, there will be six more weeks of winter. But if he fails to see his shadow, an early spring will arrive. The stock market reacts quite favorably in years when Phil predicts an early spring. Since 1900, the market is up 14.9 percent in these years, compared to a gain of only 3.5 percent in years when Phil predicts six more weeks of winter. Unfortunately for bulls, Phil did see his shadow in 2015.




Chinese Zodiac
The Chinese New Year begins sometime between January 21 and February 20 every year. The Chinese animal zodiac cycle repeats every 12 years, with 2015 being a year of the goat. Since 1900, the market prefers years of the rooster (coming in 2017), dog (2018), and pig (2019), as well as rabbit and dragon, coming in 2023 and 2024, respectively. If these trends continue, we should see some sizable gains in the U.S. stock market before the decade plays out.




Triple Crown In the United States, the Triple Crown of thoroughbred racing is the Kentucky Derby, Preakness Stakes, and Belmont Stakes. This year, American Pharaoh became only the 12th horse to ever win the Triple Crown, and the first since 1978. Unfortunately, this may not be good news for the stock market, as the Dow averages a 6.7 percent loss in years when there is a Triple Crown winner.




Stanley Cup
The market seems to prefer when a U.S. team wins the Stanley Cup. Of course, it helps that U.S. teams have won the Cup in every year since 1994, just before a very strong 20-year run for the market. With the Chicago Blackhawks winning the Cup in 2015, it would seem as though the market should trend strongly upward for the second half of the year.




Miss Universe
The Miss Universe pageant, held annually since 1952, can be used as a market indicator if you consider the region of the world from which the winner hails. The market performs particularly strong in years when the winner comes from North America or Oceania. When a European or Asian woman wins, it’s likely to be a down year.




World Series
The modern World Series has been played in October/November of every year since 1903, with the exception of 1904 and 1994. With this event occurring so late in the year, it’s helpful to use this as a metric for the following year. The market clearly favors World Series champions from the National League, gaining an average of 8.4 percent in the years following their championships, as opposed to a mere 2.5 percent gain in the years following an American League team winning the World Series. The reigning World Series champions from 2014 are the NL’s San Francisco Giants, indicating good news for the Dow Jones Industrial Average in 2015.




The President
Renewed hope accompanies the run-up to Presidential elections in the U.S. The market reacts favorably, significantly outpacing the average in the year before an election year, while falling far behind two years after an election year.




The stock market tends to perform better when a Democrat is in office (gain of 7.0 percent annually) rather than a Republican (gain of 3.2 percent per year). But more interesting than the President’s political affiliation is his dominant hand; markets prefer a righty over a lefty, but really thrive when the Oval Office is inhabited by an ambidextrous president. Unfortunately for the stock market, President Barack Obama is left handed.




Another interesting stock market indicator involves the President’s approval rating, as measured by Gallup. Surprisingly, the market performs better when the President has low ratings: years beginning with a sub-50 percent approval rating (i.e., the first poll released during the year) see better returns than those beginning with an approval rating above 50 percent.




Time Person of the Year
Each year since 1927, Time magazine has highlighted an individual or group that impacted world events during the year. This recognition is typically regarded as an honor, though individuals such as Adolf Hitler and Joseph Stalin have also been acknowledged for their impacts.

In years in which females were recognized, the Dow averaged a gain of 23.1 percent. But the following years have been disappointing; following a female win, the Dow averages a loss of 6 percent. The best indicator for market performance in the coming year, is the recognition of a larger group such as the Hungarian Freedom Fighter (1956), Middle Americans (1969), the computer (1982), or the Good Samaritans (2005).




The 2014 edition recognized the Ebola fighters in the medical community, which should be good news for the market.



White Christmas
A white Christmas in New York City’s Central Park is a majestic sight. Unfortunately, it also spells doom for the market in the following year.

We hope this paper made you laugh, giggle and forget this difficult market.

In all seriousness, investing is maybe the most important activity we partake in besides providing for our families and taking care of our health. As medicine has improved, we now live longer and have more active retirements, so we need to have a larger portion of our assets working for us both pre-retirement and post retirement in order to accomplish the bucket list items we have dreamed of during our younger days.

As I mentioned earlier, August was the most volatile month in the past several years and we saw the largest monthly decline of the S&P 500 since May 2012. This is an excellent time to come in for a portfolio review, take a new risk profile assessment and let us revisit your goals and objectives.

Please call Stephanie Gordon at 800.825.0616 to schedule a time to visit with us before year end. Many of our clients also have Required Minimum Distributions (RMD’s) due so we can complete the paperwork at the same time.

Also during periods of market unrest, please reach out and contact us if you have questions, are nervous or just need a reassuring voice of reason. If the market is trading, we are in the office. We also publish a daily market update each and every day on our website www.wtweathmanagement.com it can be found in the “insider news” tab located at the top of the page.

WT Wealth Management is a manager of Separately Managed Accounts (SMA). Past performance is no indication of future performance. With SMA’s, performance can vary widely from investor to investor as each portfolio is individually constructed and allocation weightings are determined based on economic and market conditions the day the funds are invested. In a SMA you own individual ETFs and as managers we have the freedom and flexibility to tailor the portfolio to address your personal risk tolerance and investment objectives ñ thus making your account “separate” and distinct from all others we potentially managed.

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