If investors were
fishermen, they’d probably toss January 2014 right back into the stream. At the
end of the month, U.S. stocks (S&P 500) had lost 3.6 percent of their value,
according to Barron’s. Other asset
classes hadn’t fared well either. Bond yields fell and emerging markets were
all roiled up. If you are like some fisherman (and you know who you are) and
like to review portents and signs, here are a few to consider:
January Barometer: The Stock Trader's Almanac’s
January Barometer is a theory that gives credit to the idea the performance of
the Standard & Poor’s 500 Index during January indicates the direction of
the stock market for the remainder of the year. This year’s weak performance suggests
things may be headed south during 2014.
How accurate is it?
An article on NASDAQ.com said, “The Barometer theory sounds about as scientific
as spin-the-bottle and, while impressively accurate pre-1984 (70 percent
accuracy on bullish calls and a whopping 90 percent accuracy on bearish calls),
its accuracy on the bearish calls has declined dramatically. Since 1985 its
batting average for predicting down markets has come down to a lowly 50 percent.”
Maybe flipping a coin would work just as well.
Super Bowl indicator: The theory goes
like this: When a team from the old NFL wins, the stock market will have a
winning year. If a team from the old AFL wins, markets will not do so well
during the year. So, in theory, a Broncos win would cast markets in a bearish
light and a Seahawks win would put them in a bullish one. Except, as Barron’s pointed out, both teams have their roots in the AFC.
The Skyscraper Curse (tallest is
negative), The Hemline index
(shorter is positive), and The
Presidential Approval effect (unpopular is better), The Triple Crown indicator (one horse winning it is negative), and The Sports Illustrated Swimsuit Issue Cover
gauge (an American model is a positive indicator) are like chum in the
water for some investors.
We would all like
to be able to predict the future and, clearly, many try to do just that. As
much fun as oddball indicators are, it seems likely, however, that investors’
time would be better spent identifying long-term financial goals and building portfolios
that can help meet those goals over time.
What’s in an
ad? If you were one of the millions of people watching the Super
Bowl on Sunday, then you probably got an eyeful of some of the most enticing
advertisements television has to offer. They better be! According to experts,
the average cost of a 30-second Super Bowl commercial was expected to be about
$4 million this year. That’s right – $4 million – up from about $3.8 million
last year. Of course, it was predicted more than 100 million people would watch
the game and that’s a sizeable audience!
Whether a company
is trying to reach a lot of people at once or target a very specific audience,
advertising isn’t as easy as it once was. As a recent article in The Economist pointed out:
“Poor admen… Their
industry is going through a particularly difficult time. Not only are they
confronting a proliferation of new “channels” through which to pump their
messages, they are also having to puzzle out how to craft them in an age of
mass skepticism. Consumers are bombarded with brands wherever they look – the
average Westerner sees a logo (sometimes the same one repeatedly) perhaps 3,000
times each day – and, thus, are becoming jaded. They are also increasingly
familiar with the tricks of the marketing trade and determined to cut through
the clutter to get a bargain.”
A survey intended
to measure the benefits of 700 brands on both personal and community levels
found, “The majority of people worldwide wouldn't care if 73 percent of brands
disappeared tomorrow.” Americans are more skeptical than others. In the United
States, people would not care if 92 percent of brands disappeared. The U.S.
survey results suggested just nine percent of brands are thought to actually
help improve the quality of life in America.
Are Super Bowl
ads money well spent? Some say yes; others say no. A 2010 study commissioned by
Fox Sports (the Super Bowl is shown on the Fox network) reported an 11 percent
increase in sales of products and services advertised during the big game. The
January 2014 issue of Advertising Age
reported just 20 percent of Super Bowl ads lead to sales. Maybe the better
gauge is you. Did Super Bowl ads change your purchase decisions or attitude
toward a particular brand?
Weekly Focus – Think
About It
“Of
life's two chief prizes, beauty and truth, I found the first in a loving heart
and the second in a laborer's hand.”
--Khalil Gibran, Lebanese-American
poet and author
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