The Rio Summer Olympics are in full swing, and the U.S. Olympic Team is doing awesome (94 Medals as of the time of this writing, including 31 gold). There are so many great stories of sportsmanship, teamwork, determination, and achievement, we couldn’t possibly fit them all in one post. So instead, let’s take a look at the financial impact of the games on Brazil and the U.S. and attempt to answer a question –
Is there a correlation between increased patriotism and athletic achievement and financial gains?
Rio 2016
From a backtest done on the Hedgeable platform, we can see that Brazilian equities (represented by ETF Ticker: EWZ) are up over +7% since the first event kicked off the Olympics on August 3rd! This comes in the midst of a deep recession and political turmoil in Brazil. Meanwhile, as the U.S. has been winning golds, investors have been enthusiastic too, with the S&P 500 up over +1%.
London Olympics
Is this a one time statistical anomaly? It may well be, and it is sometimes hard to assign any kind of correlation to market movements in the slower summer months. But, let’s take a look at the 2012 London Olympics as a reference point.
From a backtest done on the Hedgeable platform, we can see that British equities (represented by ETF Ticker: EWU) were up over +8% during the London 2012 games, with the U.S. market up over +5%!
Beijing & Athens Olympics
By looking at the Beijing and Athens Olympics you can start to see a trend. U.S. equities were again up during the Beijing games of 2008 – even though the S&P 500 lost over (-38%) in 2008 on the whole! – while Chinese equities (represented by ETF Ticker: FXI) lost over (-8%) of their value during the 2008 festivities.
When the games returned to their historical birthplace in Athens in 2004, U.S. equities gained over +4%, while international equities (represented by ETF Ticker: EFA) increased over +2%.
Conclusion
While it is hard to peg a 100% correlation between winning golds and the stock market, there is no denying that historically it has been a good time to be an investor during the Summer Olympic games.
Go Team USA!
