The Olympic Effect on Your Stock Portfolio

in Investing by

KEY POINTS
  • Stocks go up more than they go down.
  • It is a coincidence that stock movement tends to be positive during the Olympics.
  • Don’t react rashly to alter your portfolio, rather stick with your long-term plan.

If you invest in the S&P 500, Dow Jones, or the Russell 2000 Index, chances are you’ve enjoyed a nice bump in your portfolio the past three Olympic cycles. In fact, if you’ve invested in them since 2000, you may have noticed positive stock movement for five out of the past eight games.

Is it because you’re an astute investor with a smart allocation strategy? Or is it luck?

As it turns out, it’s mostly luck. The stock market has risen the majority of the past eight Olympic seasons – with the Sydney 2000 games being the only time all 3 indexes have declined in the past 16 years.

Stock Movement for the Olympic Games
Sochi 2014: + positive
London 2012: + positive
Vancouver 2010: + positive
Beijing 2008: +/- mixed
Torino 2006: + positive
Athens 2004: + positive
Salt Lake 2002: +/- mixed
Sydney 2000: – positive
*Stock movement concerns the following indexes: S&P 500, Dow Jones, or the Russell 2000

So, knowing that the indexes often rise during the Olympics, is there something we can learn about event-based market movement and investment strategy? Are there certain indexes or ETFs you should be paying attention to now that the games have started? Should you go out and buy stocks?

Even though market movement is often propelled by shocking global events (Brexit for example), this isn’t one of those times.

According to our Executive Vice President Of Advisory Services at Personal Capital, Kyle Ryan, stocks generally go up more than they fall: “We don’t think there is anything causal about the Olympics and stock movement. More than likely it’s a complete coincidence.”

It’s enticing to think there is a game to be played among the markets, but we recommend leaving the games to the athletes and sticking with the long-term plan you’ve worked hard to grow.

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Tamar Kuyumjian

Tamar Kuyumjian

Tamar Kuyumjian is the Content and Communications Manager at Personal Capital and has a background in personal finance.

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Disclaimer. This communication and all data are for informational purposes only and do not constitute a recommendation to buy or sell securities. You should not rely on this information as the primary basis of your investment, financial, or tax planning decisions. You should consult your legal or tax professional regarding your specific situation. Third party data is obtained from sources believed to be reliable. However, PCAC cannot guarantee that data's currency, accuracy, timeliness, completeness or fitness for any particular purpose. Certain sections of this commentary may contain forward-looking statements that are based on our reasonable expectations, estimate, projections and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not a guarantee of future return, nor is it necessarily indicative of future performance. Keep in mind investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.