It's that time of year again! On last night's Late Show with David Letterman, the cover model of this year's Sports Illustrated Swimsuit Issue was revealed to be America's own Kate Upton. While we're all familiar with the Super Bowl Indicator, have you ever heard of the Sports Illustrated Swimsuit Issue Indicator? The Swimsuit Issue Indicator says that the US equity markets perform better in years where an American appears on the cover of Sports Illustrated's annual issue as opposed to years when a non-American appears on the cover.
The table below highlights the annual performance of the S&P 500 since 1978. For each year, we also show the country from which that year's Sports Illustrated Swimsuit Issue cover model came from. Since 1978, an American has now appeared on the cover of the annual Sports Illustrated Swimsuit Issue in 18 different years. The average total return of the S&P 500 during the 17 prior years has been a gain of 14.3% with positive returns 88.2% of the time. Of the 17 years where no American appeared on the cover, the S&P 500 has averaged a total return of 10.8% with positive returns 76.5% of the time. To be sure, we would note that the S&P 500's 38.5% decline in 2008 when an American appeared on the cover caused the spread between the two performance numbers to narrow considerably.
Last year, the Swimsuit Indicator only partly worked. While the S&P 500 saw a total return of 2.1% in a year when Russian model Irina Shayk graced the cover, in terms of price performance, the S&P 500 actually saw a slight decline (-0.003%).
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