Date: Fri, 16 Jan 1998 08:20:44 EST From: Bapopik Subject: WALL STREET: Super Bowl Index; January Effect; Dead Cat Bounce Wall Street needs an historical dictionary. Maybe Random House, Merriam Webster, or Oxford University Press can publish one. I mean a big, great Wall Street block that you wouldn't want to drop on your foot. Maybe tie the book in as a gift with a subscription to THE WALL STREET JOURNAL or BARRON'S or FORBES or FORTUNE or BUSINESS WEEK or THE FINANCIAL TIMES or THE JOURNAL OF COMMERCE. All these business books, all these business periodicals, all these investors (with money!), AND NO DICTIONARY?? Oh sure, there's a book called WALL STREET WORDS if you want to know the meaning of "IRA." But I mean a real, historical dictionary. "Bulls" and "bears" to "white knights." Historical cartoons included. I have piles on Wall Street terms. Three Wall Street words in particular have been recently in the news (if not in the dictionaries). ------------------------------------------------------------------------------ ------------------------------------------- SUPER BOWL INDEX "Super Bowl Index" or "SBI" has been used, for obvious reasons. I don't have Nexis handy, but this January 1996 article is from SUPER BOWL COULD BE SUPER FOR INVESTORS By Greg Fields Knight-Ridder News Service (...) The SBI calls for an up year for the market if the Super Bowl is won by an original National Football League team before its merger with the American League created the modern-day NFL. Conversely, it will be a down year if a team from the old AFL prevails. So no matter who wins Super Bowl XXX on Sunday, the market will rally. Because both contenders--the Pittsburgh Steelers and the Dallas Cowboys--were original NFL franchises. (Yes, the Steelers are an AFC team today, but that switch came later.) So 1996 is bound to be an up year because of the Super Bowl, says Robert Stovall, a well-known New York investment advisor who has long championed the indicator. Skeptics may scoff, but the SBI scores more often than any field goal kicker in the NFL. It's been right 26 of 29 times, according to Stovall. The SBI is just one of many Wall Street legends that allegedly predict future stock market activity. Women's hemlines were once closely watched on Wall Street: If hemlines rose, so did stock prices. If they started to fall, it was time to sell. Market pundits say that indicator has come under severe duress in recent years, with eclectic fashion styles and sexual-harassment guidelines and the advent of the pantsuit. Some folklore has origins that are fairly easy to trace. For instance, the belief that October is a jinxed month has a lot to do with rather nasty stock market crashes in 1929 and 1987 and a harrowing 200-point drop in 1989. But unlike most indicators, the SBI is actually credited to an author--Leonard Koppett of The New York Times, a sportswriter who in 1978 dubbed his discovery the Koppett Cycle. (...) GO GREEN BAY!!!!!!! ------------------------------------------------------------------------------ ------------------------------------------- JANUARY EFFECT There are lots of citations for this. This one is from The January Effect by Michael Griffis Small-cap stocks usually outperform large-cap stocks from the end of December through January. This phenomenon is called The January Effect. Although short lived, it is persistent. It has occurred for at least the last 15 years (probably longer), despite the fact that it is widely known and frequently discussed. The cause? Portfolio balancing and tax-loss selling, especially by mutual and pension funds, may be responsible for much of the performance differences between small cap and large capitalization stocks. There is some research suggesting that the smaller the company, the more pronounced the effect. In fact, up to half of the annual performance of many small cap stocks may be attributable to The January Effect. (...) A similar seasonal phenomenon--The Value Effect--occurs between Value Stocks and Growth Stocks. Value Stocks outperform Growth Stocks during the short transition from one year to the next. The Chicago Mercantile Exchange has documented The Value Effect on their web site... Another article (with links) can be found at ------------------------------------------------------------------------------ ------------------------------------------- DEAD CAT BOUNCE One Friday last October, I found myself in Tunisia and heard that the Asian stock markets had crashed. Everyone knew what would follow on Monday. MORRIS THE CAT: Time for din-din! Excuse me. My apartment has been invaded by an imaginary dead cat! POPIK: Aren't you dead?? MORRIS THE CAT: Nine lives. Several days later, I got the results from that Monday. Then I didn't get another paper for several days!! I joked that I had lost all of my money in ancient Carthage. A guy had Rome and told me he'd spot me two Punic Wars. Also on my tour was Barbara Nicholson, a really nice, fabulous (now retired) woman in her late forties who had made money in the '80s bond market as head of her own firm. I told her it might be time to buy. She immediately replied: "Beware of the dead cat bounce." MORRIS THE CAT: I'm an etymologist, too. I cat-alog words. POPIK: Right. MORRIS THE CAT: I have a book! POPIK: Sure. MORRIS THE CAT: The MORRIS BOOK OF WORD AND PHRASE ORIGINS. POPIK: THAT'S AN AWFUL PUN!! THAT'S IT! OUT THE WINDOW! Gosh, you'd think you'd get more of a bounce from seven flights. Anyway, William Safire had the phrase in his column and traced it (Nexis search) to an Asian trader. It doesn't come from Asia, however. Barbara Nicholson insisted that it was simply a play on those 100 USES FOR A DEAD CAT books by Simon Bond. The phrase is shockingly not in the RHHDAS (which also doesn't have "January Effect"). Jerry Dunn's recent IDIOM SAVANT lists Wall Street slang, but has not one of these three terms. Anne Soukhanov's SPEAKING FREELY has a chapter on Wall Street, but likewise excludes all three terms. A Wall Street historical dictionary is really needed! "Dead cat bounce" plays on the old legend that a cat, if dropped from any height, always lands on its paws. "Dead cat bounce" is a little different in that the cat that's dropped from the height is already dead. It will bounce up very little after the great fall. A stock market "dead cat bounce" is not a true recovery. MORRIS THE CAT: Seven more lives! POPIK: Great. ------------------------------------------------------------------------------ -------------------------------------------