- John Coletta
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Will Yankees World Series Victory Unleash the Bulls on Wall Street?
There’s a rather odd correlation between the New York Yankees winning the World Series and Wall Street. A Yankee win historically has coincided with a bull market. An analysis by Standard & Poor’s Capital IQ reveals an average of double-digit yearly returns from stocks when the Yankees win the World Series. By contrast, the stock market tends to fall in years when the Yankees lose the championship.
An analysis of the 22 years since 1936 in which the Yankees won the World Series found that the Standard & Poor’s 500-stock index rose a minimum of 10 percent over the previous year. By contrast, when the Yankees lose the World Series, stocks fell 13 percent on average. Additionally, when the series ends after six games (as happened this year), the average return rises to 15 percent. The average fell to just eight percent if the series goes for seven games.
Despite the Yankees’ record, Wall Street tends to prefer National League victories versus the American League. An analysis of the 30 World Series wins by National League teams since 1936 show that the stock market rose an average of 15 percent the following year.
There are exceptions to the rule. When the Yankees won the 1936 World Series, the stock market declined 34.7 percent over the next year. The worst record belongs to the Boston Red Sox, who saw the stock market decline by 37 percent after their 2008 World Series victory. Coincidence or not, it will be interesting to see if this yardstick proves true this time around.