Mark Hulbert: Here’s how smart stock-market investors assess those Black Friday and Cyber Monday shopping reports

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CHAPEL HILL, N.C. — I have some advice for you if you pay close attention to those initial reports on how Black Friday or Cyber Monday sales are going:


Not only are those initial reports worthless as a leading indicator of how the holiday shopping season will turn out, you might even want to bet that they are downright misleading.

Last year is a good case in point. The S&P Retail Select Industry Index SPSIRE, +0.64%   rose on 2018’s Black Friday, by 0.3%. And, yet, from then until the end of the year, it fell 8.3%, nearly double the 4.8% loss over the same period for the S&P 500 index SPX, +0.13%.

The same reversal pattern emerges if we broaden our focus to include this index’s return over the two post-Thanksgiving trading sessions — encompassing both Black Friday and Cyber Monday. Over those two days, the S&P Retail Select Industry Index rose 2.2%, before proceeding to fall 10.0% from then until the end of 2018.

Nor are these results a fluke. Looking at all years since 1999, when this index was created, there has been a strong inverse relationship between its immediate post-Thanksgiving performance and its return until the end of the year, as this chart shows.

To be sure, since this index has existed only since 1999, there is not enough data to draw conclusions with great statistical confidence. So, as a double check, I looked at the Dow Jones Industrial Average DJIA, -0.08%   for all years since 1975, which is the first year that I was able to determine that the term “Black Friday” began being used. Sure enough, the same overall pattern emerged: In years in which the Dow rose on Black Friday, or over the two post-Thanksgiving days, it proceeded more often than not to decline through the end of the year — and vice versa.

It’s not entirely clear why investors’ initial reactions to Black Friday and Cyber Monday sales are more often wrong than right. But my hunch is that investor overreaction is a big part of the explanation: When there is even a hint of good news, they are quick to turn too bullish — from which exuberance the market inevitably reacts by coming back down to earth. And when there is even a modicum of bad news, they become too pessimistic.

Even if you don’t want to bet on this contrarian story about overreaction, you at a minimum must conclude that the trading days following Thanksgiving are nothing more than statistical noise.

The bottom line? Unless you’re a gutsy contrarian trader, you can safely ignore all the initial reports about how the holiday shopping season is shaping up. Instead focus your energies this Thanksgiving weekend on what is truly meaningful.

Read: Shopping on Black Friday? 5 ways to score the best deals

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at

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