Every now and then your editor needs to relax the brain a bit and
since I’m on the road this week, it’s the perfect time to do
something that I believe will be unique. What is Punxsutawney
Phil’s track record when it comes to market prognostications?
Hey, don’t laugh. Each year we all go over the Super Bowl
indicator. Why not look at the groundhog and his market
prowess, or lack thereof?
So, using the Ibbotson Associates’ figures for total return on the
S&P 500 since 1926, we have the following.
There are 80 years in our data base, including 2005 for which we
have to wait until year end. Also, in 1943, Phil didn’t make an
appearance…it being the war and all, I’m assuming. So that
leaves us with 78 years; 12 in which Punxsutawney Phil failed to
see his shadow, 66 in which he did.
No Shadow: The market, as represented by the S&P 500,
finished up 10 years, down 2. But, most significantly, those two
down years were miniscule…-1.3% in 1934 and -3.2% in 1990.
Of the ten up years, 7 of the 10 saw returns of greater than 20%.
Shadow: The market was up 45 years, down 21; a far greater
percentage of down years (32%) than when there was no shadow
(16%). And, 10 of the 21 down years saw negative returns of
10% or more, while of the 45 up years, only 24 of the 45 (53%)
had positive returns of greater than 20% vs. 70% when Phil did
not see his shadow.
Bottom line, in the rare occurrence Phil doesn’t see his shadow,
think positive! This year, though, Phil once again saw it so your
guess is as good as mine.
Sources:
Ibbotson Associates Yearbook
Groundhog.org
Wall Street History will return March 18.
Brian Trumbore
