You’ve heard of the “Bull Markets, Bear Knees” theory. It goes like this: When you want to know which way the equity market is headed, watch the direction of women’s dresses. In the late 19th century and early part of the 20th century, “the stock market was rather dull, and so were hemlines,” writes Burton Malkiel in his classic, A Random Walk Down Wall Street. “But then came rising hemlines and the great bull market of the 1920s, to be followed by long skirts and the crash of the 1930s.”
There is a new twist on the old idea: According to the Bespoke Investment Group’s “Swimsuit Issue Indicator”, in the 15 different years (over the last 30 years) an American appeared on the cover of the Sports Illustrated “Swimsuit Issue,” the average performance of the S&P 500 gained 13.9 percent with 13 positive years (87 percent). The other 15 years when no American took the cover spot, the S&P 500 had an average gain of only 7.2 percent with 11 positive years (73 percent). The issue hit newsstands yesterday with Marisa Miller as its cover model.
Bravo chartists! Thanks for finding a way to lighten current market woes with a bikini bottom. But, as Malkiel points out in his book, you can correlate anything—even unrelated events—with a bull market in stocks.
Say, an NFC team did just win the Super Bowl, which has in the past been correlated with bull markets …
