Update | 11:56 p.m. Wall Street should be happy that the New York Yankees won the World Series — and not just because the team is from New York. A coincidental sports indicator shows that a Yankee victory in the series has historically been bullish for the stock market.
A quick analysis by Standard & Poor's Capital IQ finds average double-digit annual returns from stocks when the Yankees became the champions, versus losses when they lost. Sorry, Philadelphia Phillies, but that’s the payoff.
In the previous 22 World Series since 1936 in which the Yankees were victorious, the Standard & Poor’s 500-stock index returned an average of 10 percent in the next year, according to the analysis (below) by Richard Peterson, director of credit, markets and risk at S.&P. and, obviously, a great baseball fan. But when the Yankees lost the World Series, stocks fell an average of 13 percent.
Mr. Peterson’s research also indicates that when the World Series ended in six games, as it did on Wednesday night, the average return was 15 percent. But when the series went all the way to Game 7, the average return fell to 8 percent.
Still, if Phillies had been able to survive Game 6 and ultimately won the World Series, that would not have necessarily been a bad sign for the stock market. In the two World Series in which the Phillies claimed victory (1980 and 2008), the S.&P. 500 returned an average of 6 percent. Of course, in the three years in which the Phillies lost, stocks rose an average of 11 percent.
There is, however, one other thing to consider: the stock market does tend to perform better over all when a National League team like the Phillies, rather than an American League team, wins the World Series. Based on the 30 World Series won by a National League team since 1936, the average stock market return was 15 percent, versus an average of 9 percent for the 43 World Series won by an American League team.
A final caveat: Despite the stock market’s average winning record after Yankee victories, annual returns did fall 34.7 percent after the team won in the Depression year of 1936 (although the Boston Red Sox did see the biggest market loss — 37 percent — after their victory last year). On the other hand, the stock market did soar 52.3 percent after the Yankees defeated the Brooklyn Dodgers in 1953.
Of course, these results are all purely coincidental. We’ll see if this indicator continues to work after the 2009 World Series is long over. And as they say on Wall Street, past performance is no guide to future returns.
– Cyrus Sanati and Jack Lynch
The World Series and Stock Market Returns
E-mail This Print Share Close Linkedin Digg Facebook Mixx My Space new_york_times:http://dealbook.blogs.nytimes.com/2009/11/04/yankee-win-may-favor-wall-streets-bulls/ Permalink Financial Services, Investment Banking, Top Headline, New York Yankees, Philadelphia Phillies, Wall Street, World Series Related Posts From DealBook The Anthropology of Wall StreetBuffett Argues Wall St. Pay Needs ‘Downside’Bailout Helps Fuel New Era of Wall Street Wealth Risk-Taking Remains as Bonuses Change Previous post Scripps Is Said to Win Control of Travel Channel Next post South Korea Pension Buys 40 Grosvenor Place 2 Comments 1. November 4, 2009 5:50 pm LinkCome on, Pilli. That’s right! Pilli! Rise! Slay the Yankees!
I had a friend named Pilli. Her dad was a real revolutionary. From Mexico. Very haughty, those Pilli. “…There are Pilli…”
— Abby Tucson, AZ 2. November 4, 2009 9:36 pm LinkAwesome - you could construct a long-short hedge around this. Short the market and use the proceeds to go “long” the Yankees winning the World Series.
— John Hancock Add your comments...Your Name Required
Your E-mail Required, will not be published
Your CommentComments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments FAQ.
Latest DealBook Headlines Panasonic Makes $4.4 Billion Offer for Sanyo Will the Real Larry Summers Please Stand Up? Cuomo Files Antitrust Suit Against Intel Some Wall St. Bonuses May Hit Pre-Crisis Highs Committee Allows a Break on Certain Auditing Rules DealBook News by Industry Airlines / Autos Basic Industries Consumer Goods Energy / Utilities Financial Services Food & Beverage Healthcare Media Real Estate Retail / Leisure Technology Telecom Contributors Andrew Ross Sorkin Editor Posts | Profile Peter Edmonston News Editor Posts Jack Lynch News Editor Posts
Update | 11:56 p.m. Wall Street should be happy that the New York Yankees won the World Series — and not just because the team is from New York. A coincidental sports indicator shows that a Yankee victory in the series has historically been bullish for the stock market.
A quick analysis by Standard & Poor's Capital IQ finds average double-digit annual returns from stocks when the Yankees became the champions, versus losses when they lost. Sorry, Philadelphia Phillies, but that’s the payoff.
In the previous 22 World Series since 1936 in which the Yankees were victorious, the Standard & Poor’s 500-stock index returned an average of 10 percent in the next year, according to the analysis (below) by Richard Peterson, director of credit, markets and risk at S.&P. and, obviously, a great baseball fan. But when the Yankees lost the World Series, stocks fell an average of 13 percent.
Mr. Peterson’s research also indicates that when the World Series ended in six games, as it did on Wednesday night, the average return was 15 percent. But when the series went all the way to Game 7, the average return fell to 8 percent.
Still, if Phillies had been able to survive Game 6 and ultimately won the World Series, that would not have necessarily been a bad sign for the stock market. In the two World Series in which the Phillies claimed victory (1980 and 2008), the S.&P. 500 returned an average of 6 percent. Of course, in the three years in which the Phillies lost, stocks rose an average of 11 percent.
There is, however, one other thing to consider: the stock market does tend to perform better over all when a National League team like the Phillies, rather than an American League team, wins the World Series. Based on the 30 World Series won by a National League team since 1936, the average stock market return was 15 percent, versus an average of 9 percent for the 43 World Series won by an American League team.
A final caveat: Despite the stock market’s average winning record after Yankee victories, annual returns did fall 34.7 percent after the team won in the Depression year of 1936 (although the Boston Red Sox did see the biggest market loss — 37 percent — after their victory last year). On the other hand, the stock market did soar 52.3 percent after the Yankees defeated the Brooklyn Dodgers in 1953.
Of course, these results are all purely coincidental. We’ll see if this indicator continues to work after the 2009 World Series is long over. And as they say on Wall Street, past performance is no guide to future returns.
– Cyrus Sanati and Jack Lynch
The World Series and Stock Market Returns
Come on, Pilli. That’s right! Pilli! Rise! Slay the Yankees!
I had a friend named Pilli. Her dad was a real revolutionary. From Mexico. Very haughty, those Pilli. “…There are Pilli…”
Awesome - you could construct a long-short hedge around this. Short the market and use the proceeds to go “long” the Yankees winning the World Series.
Your Name Required
Your E-mail Required, will not be published
XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
Your CommentComments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments FAQ.
Read Full Article »
