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Mark Hulbert: Why the stock market gets a red card during soccer’s World Cup


As if the U.S. stock market doesn’t already have enough to worry about, it soon will have to contend with the World Cup, which will be held in Qatar between Nov. 20 and Dec. 18 in Qatar.

You would be excused for being skeptical that a soccer tournament has anything to do with the stock market. But you need to understand how disheartened a country’s investors can become after their team loses in the World Cup. A significant body of academic research has found that their dejection has a pronounced impact on the stock market.

This research traces to a study two decades ago entitled “Sports Sentiment and Stock Returns,” conducted by finance professors Alex Edmans of the London Business School; Diego Garcia of the University of Colorado Boulder, and Oyvind Norli of the Norwegian School of Management. 

The professors analyzed stock market behavior following more than 1,100 soccer matches back to 1973. They found that, on average after a given country’s soccer team lost in the World Cup, its stock market the next day produced a return significantly below average. The professors did not find a correspondingly positive effect for the stock markets of countries whose teams won.

The logical consequence of this asymmetry is that the global stock market tends to be a below-average performer during the World Cup tournament. That is precisely what was confirmed by a follow-on study entitled “Exploitable Predictable Irrationality: The FIFA World Cup Effect on the U.S. Stock Market,” by Guy Kaplanski of the Bar-Ilan University in Israel and Haim Levy of the Hebrew University of Jerusalem.

Since the World Cup occurs every four years, there haven’t been many occasions to test whether this World Cup Effect would persist out of sample. But the results registered so far in this century are consistent with what these academic studies found, as you can see from the table below:

Average return during World Cups beginning in 2002

Average return since 2002 in all periods of comparable length

DJ Global World Index



S&P 500 Index



It’s worth emphasizing that the researchers are not suggesting that we become short-term market timers, going completely to cash before the World Cup begins and returning to a fully invested posture at the end. Many other factors besides the World Cup will undoubtedly also play a big role, if not much bigger, in explaining the stock market’s direction over the next couple of months.

The point the researchers are instead trying to make is that our moods play a powerful role on our investment decisions. We tell ourselves that we base our portfolio decisions solely on sober and rational analysis. As the academic research into the World Cup Effect reminds us, this isn’t always so.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at

More: This strategist has picked the last two World Cup winners. Here’s who he says will win it this time.

Plus: Could there be a stock market rally? Probably. Would it be the end of the bear market? Probably not.

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