There is little that is more trite in the investment world than trying to front-run an event that everyone already knows about years in advance. It’s like buying retail stocks right before the holiday shopping season on the theory that higher sales means higher stock prices, when in fact expectations are built in to match. Or investing in pumpkins before Halloween. Of course investing doesn’t work this way, which is why when Googling “World Cup Stocks” there are pages and pages of articles telling us which stocks will do well during World Cup season. Seasonality, whether it is yearly or every four years, doesn’t move stock prices in any consistent pattern. Shares of seasonal stocks expect seasonality and it’s all priced in. Over the long term, the three main things that affect stocks are unforeseen events, company fundamentals, and regression to the mean.
Broadcasters, casinos, beer, Twitter and Facebook, clothing companies that sell uniforms etc. These articles touting supposed winning World Cup picks only exist to get clicks and sell subscriptions to retail investors who are just starting to get curious about the possibility of putting their capital somewhere to invest. They see World Cup, they think of stocks that could make money off the World Cup will go up, and they Google it and find all this stuff to confirm their theories. But the people who these articles are appealing to, most of them do not have enough money to move stock prices in any meaningful way.
Let’s look at the numbers then for a few select stocks that many of these pieces are touting and cross reference with the World Cup dates going back to 2002. We’ll give a two-month buffer on each side to account for preparatory buying and earnings to be factored in post event. We’ll then compare the stocks with the S&P 500 and FTSE 100 for British companies over the same timeframe to see if there ever really is a noticeable, consistent World Cup bump above the general stock market for any of them. While any one stock may outperform the S&P 500 or FTSE 100 in any given World Cup year, the question really is, does any stock do so consistently every time the World Cup is played? Let’s see.
World Cup 2002