Can the Return of the McRib Really Boost Stocks? | Global News Avenue

The ribs are back. Does this mean now is the time to buy stocks?

Last month, McDonald’s (MCD) announced that its famous rib-and-pork sandwich will be available regularly in limited quantities starting Tuesday. Promotions typically boost sales for the fast-food giant due to the dish’s scarcity, but historical performance S&P 500 Index The sandwich’s return during the “McRib SZN” also bodes well for the stock market.

So is a fast food pork sandwich worthy of comparison with other stock market phenomena such as “santa claus rally” and”Sell ​​in May and walk away?”

What is the “ribs effect”?

Nick Maggiulli, COO of Ritholtz Wealth Management, said that between 2010 and 2023, when the McRib was available, the S&P 500’s average daily return was 0.1%, while on days when it was unavailable, the S&P 500’s average daily return was 0.1%. The rate of return is 0.04%.

Maggiulli first calculated the “McRib effect” in 2018, when he found that when the McRib was launched between 2010 and 2017, the S&P 500 outperformed it by an average of 7 basis points (a basis point is one hundredth of a percentage point). ). On an annualized basis, this represents an outperformance of a full 19 percentage points.

The severity of outperformance has fluctuated over time, narrowing to 5 basis points in 2020 and touching 6 basis points last year.

Some have observed a similar phenomenon with Bitcoin (Bitcoin USD), the price of the McRib tends to rise when it becomes available. (Bitcoin climbed last November as McRib hits McDonald’s menus and financial markets Full of expectations Spot Bitcoin ETF Approval. )

The limitations of the “ribs effect”

Maggiulli discussed the McRib effect in 2018 as a way to illustrate the following statistical principles: Relevance Do unequal causation. As Maggiuli points out, stock market movements are determined by decisions made by millions of people simultaneously, not by a single factor like the supply of steaks.

In fact, historically, ribs tend to be reintroduced in the last few months of the year. auspicious moment for the stock market.

stock is a venture capital Essentially, that’s why it’s important to evaluate many different factors when investing in a specific company or fund that tracks a specific situation. Indexes such as the S&P 500 Rather than a single factor – such as whether there is a favorite limited-time sandwich on the market.

Even if you really, really love that sandwich.