Every financial advisor has a strategy for predicting the direction of the stock market. Most focus on
Question:
Every financial advisor has a strategy for predicting the direction of the stock market. Most focus on fundamental economic data, such as interest rates and corporate profits. But an alternative strategy might rely on a famous correlation between the Super Bowl winner in January and the direction of the stock market for the rest of the year: The stock market tends to rise when a team from the old, pre-1970 NFL wins the Super Bowl and tends to fall when the winner is not from the old NFL. This correlation successfully matched 28 of the first 32 Super Bowls to the stock market, which made the “Super Bowl Indicator” a far more reliable predictor of the stock market than any professional stock broker during the same period. In fact, detailed calculations show that the probability of such success by pure chance is less than 1 in 100,000. Should you therefore make a decision about whether to invest in the stock market based on the NFL origins of the most recent Super Bowl winner?
Step by Step Answer:
Statistical Reasoning For Everyday Life
ISBN: 9780321904645
4th International Edition
Authors: Jeffrey Bennett, William L. Briggs, Mario F. Triola