Triple Crown a Bad Bet for Dow

By Michael Driscoll, Wall Street Journal

Horse-racing fans might be rooting for a California Chrome victory at the Belmont Stakes next month, but stock investors aren't. A racehorse winning the Triple Crown is decidedly bearish for the Dow.

The Super Bowl Indicator annually advises on which way stocks will turn, but the Triple Crown Predictor comes into play much less often. Only 11 times in the past century—starting with Sir Barton in 1919—has a horse swept the Kentucky Derby, Preakness Stakes and Belmont Stakes. On eight of those occasions, the Dow Jones Industrial Average came up lame, ending the year in the red.

Coincidence, you say? Well, maybe. (OK, probably.) But note that, since the Dow was introduced in 1896, it has risen two out of every three years, a 66% winning percentage that is nearly the inverse of the results in Triple Crown years. And in most of the years a horse swept the three contests, stocks that had put in middling performances ahead of the racing season took nasty dives after it.

Take the most-recent winners: In 1977 and 1978, Seattle Slew and then Affirmed won at Churchill Downs, Pimlico and Belmont. But they couldn't outrun stagflation, and neither could the stock markets, which gave up a fifth of their value across the two years.

Racing fans hope 2014 breaks a dry spell for the horses. Fans of stocks hope the year breaks other trends, too.

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