Finance
1. 1 paragraph and 1 works cited:
The Super Bowl Indicator Theory suggests that the stock market will have a positive year if the National Football Conference team, or a team with an NFC origin, wins. If the American Football Conference team wins, the market will fall. According to the recent news (MarketWatch, 2/6/2017), it has accurately predicted the direction of the market for the year following 40 of the 50 Super Bowls since the first super bowl in 1967. Why do we have such phenomena? Is the finding consistent with market efficiency?
2. 1 paragraph and 1 works cited:
From 1/25/2021-1/30, shares of the Texas-based videogame retailer GameStop surged as much as 815%, but GameStop Corp. is far from alone in going vertical this year. Everything from a hydrogen fuel-cell provider Plug Power Inc. to a struggling movie-theater chain AMC has rocketed in the past few weeks. Behind the swings, many see ordinary investors, stuck at home in the pandemic, swapping tips and hatching trading strategies on online forums like Reddit’s WallStreetBets—often buying things Wall Street has bet against. Many tout their long-shot wagers with the expression “YOLO,” or, “You only live once.” (please find the article ” GameStop Mania Reveals Power Shift on Wall Street—and the Pros Are Reeling under the reading assignments folder).
Based on your research, please discuss similarities and differences among the companies’ business models and common characteristics (for example, GameStop, AMC, BlackBerry Ltd., Plug Power Inc., Bed Bath & Beyond, and NIO Inc., etc.) targeted by retail investors. How have message boards on sites such as Reddit contributed to the recent rally in selected companies’ share prices? What are likely to be the regulatory repercussions of the recent trading in GameStop (if any)?
ANSWER
The Super Bowl indicator has a very high accuracy rate. The phenomenon continues to be accurate because historic study of statistics reveal a condition for trends and patterns to for some sort of rhythm (Thompson 2017). This rhythm makes it easier to use historic data to make more than 80% accurate predictions. The same concept can be observed in market efficiency where stoke and security prices reveal relevant potential future information. By graphically tabulating this data, consistencies and inconsistencies can be reflected upon and whether the data is on market forces or the super bowl, they point to one point which eventually becomes the truth. The major aim of investors is to put in their money when the markets are rising, get protected when markets are going down and make a lot of profits after a given period of time. Same as in a sport and just like the indicator is accurate, it can similarly be relied upon to come up with accurate predictions on the investment markets.
In post pandemic world, there are definitely some companies that have emerged as winners while others have remained constant and other on a steady decline to bankruptcy. Companies like GameStop rely and their customers being at home same as many social media streaming and online shopping companies (Wall Street Journal). The similarity all these companies is that they deal in software rather than hardware, they propel the idea of virtual shopping, meeting, playing among other many activities that the modern market values. However, on the other side companies that rely on services and hardware such as an actual movie theatre or a hotel has seen many companies of the same business models slowly sink into debts and bankruptcy. Regulation is unlikely to help solve this problem because it is a natural evolution of the market, it will happen in one way or the other.
References
The Wall Street Journal. GameStop Mania Reveals Power Shift on Wall Street—and the Pros Are Reeling. Retrieved on 16th April 2021 from https://www.wsj.com/articles/gamestop-mania-reveals-power-shift-on-wall-streetand-the-pros-are-reeling-11611774663
Thompson, T. H., & Sen, K. C. (2017). Exploring a market curiosity: an examination of the Super Bowl Indicator. Managerial Finance.
