Outside the Box

Bikinis and Bolsas: The Sports Illustrated Swimsuit Indicator

Editors Note: Humans are pattern seeking animals. It’s a crucial part of the way we’ve evolved to survive what nature throws at us. Humans involved in investment are notoriously obsessed with patterns. If such-and-such is found to be highly correlated with so-and-so then many conclude there is a causal link.

Many an investment strategy has been based on finding some pattern in the movements of past indicators…only to find the correlation breaks down as soon as the strategy is applied.

Today we’re republishing an article where Eric Fry takes a look at an unlikely predictor for stock market returns. On the face of it, it seems impossible that there could be a connection. But on the other hand, could there be? You decide.



Bikinis and Bolsas: The Sports Illustrated Swimsuit Indicator

Photo by Butz.2013

Fifteen years ago, I discovered an improbable connection between the nationality of the model appearing on each cover of the Sports Illustrated swimsuit issue and the subsequent direction of share prices on the national stock exchange of her home country.

On a chilly February day in New York City, as I strolled past the stock exchange on the way to my office at 30 Wall Street, I noticed a passerby carrying a copy of the just-released Sports Illustrated swimsuit issue. After a series of random, stream-of-consciousness thoughts, I wondered to myself, “Wouldn’t it be amusing if there was some sort of connection between the swimsuit issue and share prices?”

Just for kicks, I decided to roll up my sleeves and dig into this project. After quite a bit of research and number-crunching, I came up with this brand-new indicator…and published my findings in a February 2000 issue of Grant’s Investor:

For dispassionate financial types such as ourselves, for whom scantily clad models are but so many inadequately dressed Homo sapiens, the Sports Illustrated swimsuit issue nevertheless offers a particular allure – investment guidance…

When a bikini-clad supermodel from a foreign country graces the cover of Sports Illustrated, her appearance tends to kick off a [four-year] bull run in the stock market of her native land…

In 1978, Brazil’s Maria Joao appeared on the cover of SI’s swimsuit issue. Four years later, her country’s stock market had soared an astounding 465%.

Next up, in 1986, the stunning Australian model, Elle Macpherson, made her first of several cover appearances. Over the ensuing four years, the Australian Stock Exchange’s 50 Leaders Index rose

When the Swedish beauty Vendela Kirsebom graced the cover of the magazine in 1993, the OMX-Stockholm index rose to the occasion by appreciating 263% over the next four years…

When the Czech supermodel Paulina Porizkova first appeared in 1984, her native land was in the grip of Communist rule and had no stock exchange. Today, freedom rings in the Czech Republic and its vibrant economy is the backbone of central Europe…

Perhaps these remarkably favorable results are no mere accident. After all, “what better way to strike patriotic fervor and self-confidence in the heart of a nation – and stimulate its economy – than by splashing one of its bathing beauties on the cover of Sports Illustrated?

If it is not already clear, dear reader, I devised this indicator for its amusement value, not its investment value. But here’s the crazy thing: This indicator has amassed a track record that is as stunning as any swimsuit cover model.

For example, the 2000 Sports Illustrated issue that inspired this indicator featured the Czech beauty Daniela Pestova. Four years later, the Prague Stock Exchange Index had soared 86%. And the good times did not stop there…

In 2001, Sports Illustrated placed the lovely Elsa Benitez on the cover, making her the first Mexican to claim the honor. Four years later, the Mexican bolsa had more than doubled.

Then, in 2002, Sports Illustrated gave the nod to Argentina, birthplace of the stunning cover model Yamila Diaz-Rahi. I admit; I was skeptical. Argentina seemed a very dicey investment proposition, given the country’s travails at the time. Fresh on the heels of a wrenching currency devaluation and amidst mounting economic difficulties, Argentina did not seem like a red-hot investment destination. But Yamila’s appearance in a swimsuit consisting only of silver and jade argued persuasively to the contrary.

“Riches await” seemed to be the message to intrepid investors in Argentine stocks. Once again, the Argentinean stock market delivered on Yamila’s implicit promise. Over the following four years, Argentina’s Merval Stock Index jumped 73%.

As the table below shows, from 2000 to 2009, the Sports Illustrated Cover Indicator produced six straight winners, including a dazzling 406% gain off the back of Petra Nemcova’s dazzling appearance on the 2003 cover.


Not until last year did the SI Cover Indicator’s recent winning streak come to an end. No one disputes the striking beauty of Russian model Irina Shayk. But her 2011 appearance on the Sports Illustrated cover kicked off a truly ugly four-year skid in the Russian stock market. Fortunately, losses like these are the exception.

Now that the Sports Illustrated Cover Model Indicator has more than three decades under its G-string, the indicator’s impressive track record is indisputable…if somewhat improbable.

But facts are facts…

And the facts are not merely that foreign stock markets tend to perform well when a homegrown beauty makes the cover of Sports Illustrated, the facts are also that these strongly performing markets have trounced the MSCI EAFE Index of foreign stocks.

In other words, the Cover Indicator has excelled both in absolute terms and relative to other foreign markets.


On average, the foreign stock markets indicated by cover model appearances produced double the returns of the MSCI Index’s average returns during the identical time frames.

Which foreign bourse or bolsa should the globe-trotting philogynist now consider? Sports Illustrated is providing no answer. American models like Kate Upton and Hannah Miller have been grabbing the cover slot since 2011. So we’ll have to wait at least one more year for a new signal from the Sports Illustrated Cover Indicator.

Is this quirky indicator somewhat silly? Of course it is.

Is it entirely frivolous? Maybe not.

The selection of a cover model reflects a subtle cultural sensibility. We like to be with the winning team. And just maybe the fashion world has an innate sense for which country will be the next winning team.

Whatever the reason, the indicator seems to work.

Weird, huh?

Good investing,

Eric J. Fry

P.S. If you enjoyed today’s issue, please check out Non-dollar report to find similar insights from Eric Fry

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