The Groundhog Indicator
Brian Trumbore
President/Editor, StocksandNews.com

Every now and then your editor needs to relax the brain a bit and since I'm on the road this week, it's the perfect time to do something that I believe will be unique. What is Punxsutawney Phil's track record when it comes to market prognostications?

Hey, don't laugh. Each year we all go over the Super Bowl indicator. Why not look at the groundhog and his market prowess, or lack thereof?

So, using the Ibbotson Associates' figures for total return on the S&P 500 since 1926, we have the following.

There are 80 years in our data base, including 2005 for which we have to wait until year end. Also, in 1943, Phil didn't make an appearance?it being the war and all, I'm assuming. So that leaves us with 78 years; 12 in which Punxsutawney Phil failed to see his shadow, 66 in which he did.

No Shadow: The market, as represented by the S&P 500, finished up 10 years, down 2. But, most significantly, those two down years were miniscule?-1.3% in 1934 and -3.2% in 1990. Of the ten up years, 7 of the 10 saw returns of greater than 20%.

Shadow: The market was up 45 years, down 21; a far greater percentage of down years (32%) than when there was no shadow (16%). And, 10 of the 21 down years saw negative returns of 10% or more, while of the 45 up years, only 24 of the 45 (53%) had positive returns of greater than 20% vs. 70% when Phil did not see his shadow.

Bottom line, in the rare occurrence Phil doesn't see his shadow, think positive! This year, though, Phil once again saw it so your guess is as good as mine.

Sources: Ibbotson Associates Yearbook
Groundhog.org

Brian Trumbore