The Best of Kass
Among his posts this past week, Kass explained what Super Bowl ad spending means for stocks and reviewed the past week's economic indicators.
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Stock Market Super Bowl Indicator
Originally published on Saturday, Feb. 2 at 9:00 a.m. EST.
- The heavier the Super Bowl advertising by a company, the more likely its stock will underperform.
On Sunday, one of the grand sporting events of the year will take place: the Super Bowl.
Starting with Super Bowl XXXIV in January 2000, I created the Stock Market Super Bowl Indicator. The indicator, as Alan Abelson noted in Barron's:
... is a contrary indicator, kind of like the cover of Time. Its critical components are the commercials carried on television coverage of the event and the identity of the companies doing the advertising. Its virtue is not as a forecaster for the market as a whole but for individual sectors of the market.
My indicator dictates that the more intense the Super Bowl TV advertising by a group of companies, particularly in a specific industry, the more likely the stocks of those companies will perform poorly in the year ahead.
Total ad spending has decreased by approximately $50 million compared to 2012, with auto manufacturers cutting their total ad spending in half, from $136.5 million in 2012 to an estimated $60.8 million in 2013. This could be a result of continuing concerns about a weak European market or a more cautious attitude with regard to domestic automobile sales relating to the fiscal drag of higher personal tax rates.