A random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing

The Super Bowl Indicator
Why did the market go up in 2009? That’s easy to answer
for a technical analyst who uses the Super Bowl indicator.
The Super Bowl indicator forecasts how the stock market
will perform on the basis of which team wins the Super
Bowl. A victory by an NFC team such as the Pittsburgh
Steelers in 2009 predicts a bull market in stocks, whereas a
victory by an AFC team is bad news for stock-market
investors. In 2002 the New England Patriots (AFC team)
defeated the Saint Louis Rams (NFC), and the market
responded correctly by falling sharply. While the indicator
sometimes fails, it has been correct far more often than it has
been wrong. Naturally, it makes no sense. The results of the
Super Bowl indicator simply illustrate nothing more than the
fact that it’s sometimes possible to correlate two completely
unrelated events. Indeed, Mark Hulbert reports that the
stock-market researcher David Leinweber found that the
indicator most closely correlated with the S&P 500 Index is
the volume of butter production in Bangladesh.

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The Odd-Lot Theory
The odd-lot theory holds that except for the investor who
is always right, no one can contribute more to a successful
investment strategy than an investor who is invariably wrong.
The “odd-lotter,” according to popular superstition, is that
kind of person. Thus, success is assured by buying when the
odd-lotter sells and selling when the odd-lotter buys.
Odd-lotters are the people who trade stocks in less than
100-share lots (called round lots). Many amateurs in the
stock market cannot afford the $5,000 investment to buy a
round lot (100 shares) of stock selling at $50 a share. They
are more likely to buy, say, ten shares for a more modest
investment of $500.
By examining the ratio of odd-lot purchases (the number
of shares these amateurs bought during a particular day) to
odd-lot sales (the number of shares they sold) and by looking
at what particular stocks odd-lotters buy and sell, one can
supposedly make money. These uninformed amateurs,
presumably acting solely out of emotion and not with
professional insight, are lambs in the street being led to
slaughter. They are, according to legend, invariably wrong.
It turns out that the odd-lotter isn’t such a stupendous

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dodo after all. A little stupid? Maybe. There is some
indication that the performance of odd-lotters might be
slightly worse than the stock averages. However, the available
evidence indicates that knowledge of odd-lotters’ actions is
not useful for the formulation of investment strategies.