6 Weirdest Stock Market Facts
Trading and investing in stocks can often be confusing. Sometimes predictions fall apart, things go down when you were sure they were going to go up, and factors that you never even considered end up being important. In short, nobody knows it all, and nobody always wins.
Perhaps the most confusing thing about the stock market is the sheer amount of unexplainable anomalies. From the interesting to the down right weird, several occurrences and trends stick out, and we've highlighted a few of the most unbelievable facts below.
The Super Bowl Indicator
The Super Bowl is the championship game for the National Football League, and its had an odd history of predicting the market. According to this theory, investors should cheer for an old NFL team (most members of the NFC division) to win over teams that joined from the old AFL (AFC division).
A win from an NFC team indicates a Bull Market and means the stock market will be up for the following year. This indicator boasts an 80% accuracy rate, although in 2008 the NFC's New York Giants won the Super Bowl and the stock market proceeded to have one of the worst years since the Great Depression.
The Curious Case of Takashi Kotegawa
Takashi Kotegawa is a Japanese day trader who rose to fame several years ago with a surprisingly successful trading record. In just eight years time, Kotegawa turned about $13,600 into over $153 million. Kotegawa credits his success o his short-term outlook, and he pays no attention to future market prospects.
The most surprising thing, however, is Kotegawa's lifestyle choices. The mega-rich trader doesn't live lavishly at all, and tends to eat cup ramen for almost all of his meals. He says that it saves him time and prevents him from eating meals that will make him tired.
An Interesting Beginning
The New York Stock Exchange is now one of the most notable trading platforms in the world, but it came from very simple beginnings. Although officially founded in 1817, the NYSE traces its roots back to the “Buttonwood Agreement” in 1792. The story goes that 24 stockbrokers met outside of 68 Wall Street, New York and signed an agreement under a buttonwood tree, essentially starting the now famous NYSE. Wall Street itself has a very literal history, as the road was laid out behind a 12-foot-high wooden blockade meant to protect Dutch settlers from British and Native American attacks.
Wake Me Up When September Ends
On average, the market performs the poorest in September. Since 1950, the Dow has declined 1.1% and the S&P 500 has declined 0.7% on average during the month of September. Since the Nasdaq was created in 1971, its composite index has fallen an average of 1% in September.
There are several explanations for this phenomenon, but one of the most cited is that trading volume decreases in the summer while investors take time off and go on vacations. Once they return to work, they initiate a sell-off as they get rid of positions they had been planning on selling.
Fractions or Decimals?
In the United States, changes in stock prices were expressed as fractions until the year 2000. The US lagged behind other major stock markets like the London Stock Exchange and the Paris Bourse, which had switched over to the decimal format several years earlier. In the late 1990s, US congressional leaders enacted a law that mandated the switch over to decimals, as an effort to make understanding stock values easier for the average investor.
The Origins of “Bear” and “Bull”
In investing terms, a “bear market” refers to a decline in prices, while a “bull market” refers to rising prices. Although these terms have become standard vocabulary for all traders, it is unclear exactly where these terms originate from. Gambling on fights between live bears and bulls used to be common practice in the old West, and the terms probably have something to do with this.
Some speculate that it is a reference to the manner in which each animal attacked, with a bull thrusting its horn upwards and a bear swiping downwards. Others think it's a reference to bearskin sellers, who would often speculate on the future prices of the skins and would benefit from a decline in those prices. At the time, the opposite of a bear was assumed to be a bull.
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