Yankees in First Shows Winning Plan Without Bonds: Chart of Day

Saw this on Bloomberg today.

By Mason Levinson and Jeff Kearns
Aug. 12 (Bloomberg) -- The New York Yankees’ front-running status might lead to some joyous months in the Bronx and profitable ones on Wall Street.

The CHART OF THE DAY compares the historical performance of the S&P 500 Index, the benchmark index for American equities, from Aug. 12 to year’s end when the Yankees are in first place, as they are today, to when they trail.

During the 33 years since 1928 that the Major League Baseball team led its division on Aug. 12, the S&P 500 had average gains of 3.3 percent for the remainder of the year. That’s five times higher than the 0.64 percent average gains the index had during the 48 seasons the Yankees weren’t in first place.

“As a Yankees fan I can tell you why that happens: because the Yankees are always in the lead and the market goes up two-thirds of the time,” said Richard Bernstein, chief investment officer of New York-based Richard Bernstein Capital Management LLC and former chief investment strategist of Merrill Lynch & Co. “You can put it up there with such other notable buy signals as who wins the Super Bowl.

“One shouldn’t underestimate the strength of spurious correlations.”

The Yankees, following a four-game sweep of division rival Boston last weekend, led the Red Sox by 5 1/2 games through Aug. 10 in the American League East.

26 Titles

Of the Bronx, New York, team’s 26 World Series titles, 22 came after holding a first-place lead on Aug. 12.

The S&P 500 gained the most for the period in 1982, rising 37.32 percent. On Aug. 12 that year, Mexico Finance Minister Jesus Silva Herzog notified its creditors, the International Monetary Fund, the U.S. Federal Reserve and the U.S. Treasury Department that Mexico was unable to pay the principal on debt due on Aug. 17. The S&P 500 and the Dow Jones Industrial Average both registered lows that week and launched a five year-bull market.

“As a Red Sox fan,” said Diane Garnick, who helps oversee $403.9 billion as an investment strategist at Invesco Ltd. in New York. “I always thought the Yankees drove up the prices for players, not the market as a whole.”