Who says that March Madness has anything to do with our investment portfolios and exchange traded fund (ETF) picks? Apparently, research from professor’s at top universities do.
Alex Edmans at the Wharton School of the University of Pennsylvania, Diego Garcia at the University of North Carolina and Oyvind Norli at the Norwegian School of Management have research that shows a relationship to losing and to movement in the stock market. When a national team loses an international competition, the country’s stock market suffers. Soccer matches in the World Cup were scrutinized intensely in the research, but they also followed cricket, rugby and basketball matches, says Mark Hulbert for MarketWatch.
On average, if a country’s team loses, its stock market suffers the next day. The impact of sports results on an investors mood may be larger than we think, especially as most, not all, investors are male and sports fans. This concludes once and for all that in the face of our emotions, our intellects often stand no chance. [Happy Anniversary: Two Years After The Markets Lows.]
This is why we at ETF Trends implement a trend following strategy, which takes away the emotions. We use the 200-day moving average as a guide, and impart an entrance and an exit strategy. This way, no matter which team wins or loses, we know how we are playing our investment game. [An ETF Trend Following Plan For All Seasons.]
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.