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Is Masters Golf A Bogey Or Hole-In-One Market Predictor?

Is Masters Golf A Bogey Or Hole-In-One Market Predictor?

November 13, 2020
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This year’s Masters Golf Tournament teed off Thursday at the Augusta National Course in Georgia. While there will be some familiar sights as the players compete for the coveted green jacket, it will also be a year unlike any other.

Due to the ongoing effects of the COVID-19 pandemic, the tournament is being played in November, rather than its usual spring slot, which means that Tiger Woods is still the defending champion 19 months after his comeback victory in 2019. This change in season will suit players who can adjust to the very blustery, rainy conditions, as demonstrated on the first day when play was suspended due to thunderstorms. The biggest change will be that there will be no fans at the course—no yells of “get in the hole!” and none of the famous atmosphere that some players revel in so much.

We at LPL Research have been trying to decide who we should be rooting for this year so we decided to take a light-hearted look at whether who wins the Masters had any predictive power for the stock market. As seen in the LPL Chart of the Day below we looked at the nationalities of all Masters Winners since 1974, when South African Gary Player won, and how the S&P 500 Index performed over the next four quarters.

View enlarged chart. 

Based on this data, an unlikely repeat for 2000 winner (and unwitting dot-com-bust harbinger), Fijian, Vijay Singh would be the worst signal for the market returns in 2021. But don’t worry—he’s currently a 2000 to 1 shot. Unfortunately, the nationalities with the best forward returns—Argentina, Canada, and Australia—don’t have any realistic prospects this time, so we are going to throw our irons behind the 10 to 1 shot, Spain’s John Rahm. On the five occasions that a Spaniard has triumphed, the S&P 500 has never been down over the next four quarters, with an average positive 16% return. Additionally, a winner from anywhere in Europe has led to an average 14% forward S&P 500 return versus 6% for the rest of the world!  “Once this year’s Masters winner is crowned on Sunday, we’ll be watching if this market predictor is up to par or, more likely, ends up in the rough,” joked LPL Chief Market Strategist Ryan Detrick.

 

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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. All index and market data from FactSet and MarketWatch. This Research material was prepared by LPL Financial, LLC.

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