Basically I am proposing the world's craziest model to forecasting economic shifts. The model is predicated on a single fact: the Dow Industrial Average will, on average, closely mimic the performance of PGA Golfing great Tiger Woods. You heard me correctly. Over the past fifteen years the DOW has actually followed Tiger's performance. Even more fantastic is that the "The Tiger Woods Economic Indicator" is a leading indicator that often precedes the DOW's reaction by 3 - 6 months.
The history of the Tiger Woods Theory is extraordinarily complex and may be difficult to follow. Therefore, I have broken down the algorithms into a few more simple steps:
- Myself and several other Software Engineers or Product Evangelists and VPs of Something Ridiculous as we were called during the internet bubble were laid off when said bubble busted.
- My good friend and I were watching golf in June of 2001 when it occurred to me, damn Tiger was playing like crap! Very un-Tiger like.
- I continued to watch Tiger utterly fall a part for the rest of the summer.
- Then Sept 11th happened. I immediately knew who was to blame. Tiger F'ing Woods! First I am laid off, then my savings are depleted, now the worst attack on US soil since Pearl Harbor and he is placing 16th...20th...25th...29th?!?!?!?
- This led to a previous but less mathematics-based theory, "The World Revolves Around Tiger Woods Theory" which would predict both economic movements and world events.
- Then, much later into 2008, a friend reminded me of this "crazy" theory and reminded me that yet again the DOW has collapsed and...wait for it...Tiger Woods is dropping from tournaments due to an injury!
- I then updated the theory to mathematically compare Tiger Woods career performance against that of the DOW.
The analysis of the theory is pretty simple.
- The first index tracks Tiger Wood's performance from 1993 to the present. The indicator itself records not Tiger Wood's score, but his placing in each tournament. If Tiger Woods misses the cut for any reason (did not play, dropped out, missed the cut) the index records as 0. If Tiger does place, the index reads as 100 - actual placement.
- A second index tracks the DOW's closing
- The two indexes are then compared by over the same time period
- Polynomial Trend Lines are applied to each index over time to demonstrate the trend
The results of this analysis is the above picture. More results to follow.
I may start updating the trend to include worldly events like Sept 11th and the Iraq War, I will wait to see what fits the curve.