With the first week of 2016 Summer Olympics almost in the books we thought It would be a good time to take a look at the games. As of Thursday morning the United States is leading the gold medal count with 11, and leading overall with 32. It should be little surprise that Katie Ledecky and Michael Phelps have been the biggest contributors to those totals with 3 gold medals each.
While that is great and all, let’s look at something that is a little more pertinent. An Investopedia article by Tim Parker looks back on the impact of the Olympics on the Dow Jones Industrial Average and the host countries.
The article finds that in the 26 Summer Games between 1900 and 2012 the DJIA had a positive return 68% of the time and the average return across all of the games was a whopping 4%. At a glance that might not seem like a lot but considering since 1928 the Summer Games are only two weeks long. The host countries during that time have experienced returns largely similar to those here in the US. On the other hand, the 21st century games have been a little less eventful with the average return essentially flat at 0.10%.
Long story short the Summer Games generally are a source of optimism for the markets, but in contentious years the markets still struggle, despite the games.
All the best,
Wesley R. Nicholson, Mike Allen and Aaron Everdyke