Skirt length. Lipstick. The Sports Illustrated Swimsuit Issue. Not generally things you would correlate with the stock market.
But the theories are out there. Take the first, for instance, which states that the higher the skirts, the better the outlook for stocks. This is because lengthier skirts are worn throughout pessimistic eras while their more abbreviated counterparts are worn during periods of optimism.
The lipstick indicator, though, is more of a monetary expression of interests. Lipstick tends to be purchased in greater quantities during poorer economic times as it is a modest luxury.
Unlike the former indicator, this one has some merit as it was “coined by Leonard Lauder (chairman of Estee Lauder), who consistently found that during tough economic times, his lipstick sales went up.” This gauge is described as a “leading” indicator, meaning that it attempts to foretell future events in the economy rather than a “lagging” indicator which looks at past events.
Next, the Sports Illustrated indicator, created by Bespoke Investment Group, attempts to estimate the returns of the Standard and Poor’s 500, or S&P 500, a measure of the stock market. This indicator clarifies that there are higher stock market returns when there is an American model on the cover of the Swimsuit Issue and that these returns are lower when a non-native model appears on the cover, according to Investopedia.com. Interestingly enough, “between 1978 and 2008, the average return of the S&P 500 was 10.5 percent; when the cover model was American, the average annual return was 13.9 percent. When the cover model was a foreigner, the average annual return was 7.2 percent.”
Kiplinger.com explains several more indicators for trying economic periods. As one will see, these gauges are a tad more contemplative, or more real-worldly, than above. We start first with the movies. It turns out, when a recession hits, individuals flock to the theaters for enjoyment, much the same way lipstick is a cheaper amenity during a hard stretch.
The National Association of Theatre Owners stated that, in the first quarter of 2009, ticket sales increased 9 percent. Likewise, in recessionary periods people look to the comfort of a night out.
Over the past seven years, dating website Match.com had its most visitors in the last three months of 2008, the period in which Lehman Brothers and AIG were causing mayhem in the markets.
The next indicator alleges the antithesis of the stereotypical consumption-driven American. The National Gardening Association declared a 19 percent jump in domestic gardening in 2009, seemingly to save a buck or two.
Desperate times call for desperate measures, and in this case, we revert back to our agrarian roots, literally.
Finally, as somewhat of a tagalong to the lipstick indicator, eyeliner and mascara sales increased 9 and 13 percent, respectively, for an annual episode commencing in March 2009. Though these indicators are somewhat dated, they portray interesting changes which come about from imperative lifestyle modification when money is tight.
Economics and finance are rarely used with the words “fun.” Hopefully, this snippet of humor will allow you to open up to these subjects and see them for what they can be: an insight into the world around us.
And if these don’t suit you, make your own. Test it. Maybe you’ll hit it rich, or at least have a little fun. I mean, the swimsuit edition is for learning purposes, right?
