Super Bowl Indicator Predicts Market Gains

Forget that the stock market hit an air pocket last week, and there’s no telling when we’ll have a real government again.

Call your broker - now. There’s an 86 percent probability the market will go up this year.

Thank the Kansas City Chiefs for losing in the National Football League playoffs last Sunday. That means the Super Bowl will be won this year by a team that was in the old National Football League before it merged with the American Football League in 1970.

When an old-NFL team wins, the market goes up. When an old-AFL team wins, the market sinks.

The so-called Super Bowl Indicator has held true in 25 of the 29 years the Super Bowl has been played.

And matters never have been settled this early. For the first time ever, both teams playing for the American Football Conference championship - the Pittsburgh Steelers and the Indianapolis (formerly Baltimore) Colts - are old-NFL teams.

Money sense for kids

The Washington State Cooperative Extension Service is selling a six-part home-study program entitled “Money Sense for Your Children.”

The lessons, appropriate for any age, cover topics like allowances, understanding advertising, and distinguishing between needs and wants when putting together a spending plan.

They will be mailed every other week.

To register, send a $10 check to: Chris Koehler; WSU Cooperative Extension; 222 N. Havana; Spokane, WA; 99202-4799.

Cash flow explained

What is cash flow, and how is this useful in evaluating stock for investment?”

In recent years, investment analysts and others have realized that net income, as reported in corporate financial statements according to so-called generally accepted accounting principles, is not the only - or even the best - way to look at a company’s performance. What really matters is how much cash the company is making on behalf of the stockholders, who put their cash into the business.

“Cash flow,” in its most common definition, is after-tax profits plus depreciation expense and other non-cash expenses. If you see a big difference between cash flow per share and net earnings per share, say in a Value Line report, you may want to investigate further to learn the reason.

Keep Those 1099s

Fund investors will soon find their mailboxes flooded with 1099s, the tax statements that show how much the funds distributed to their shareholders last year. Given the performance of the stock market, many forms should show hefty amounts.

Whatever you do, don’t toss the 1099s into the trash after paying 1995 taxes, cautioned Dee Lee, owner of Harvard Financial Educators, which conducts financial education seminars for corporations.

Such careless bookkeeping can lead you to pay more taxes than you really owe. After calculating your taxes for 1995, you should add the amount of the fund distribution to your “cost basis” in the fund shares.

The cost basis is generally the initial investment and certain adjustments, and it is subtracted from the sale price for purposes of calculating your taxable gain.

A bigger cost basis means a smaller tax bill at a future time, after you finally sell those shares, whether this year or many years hence.

Taxes, investments may conflict

Jan. 1 has passed, and now is a good time to give up fancy maneuvers and go back to tried-and-true advice: Don’t let tax considerations drive your investment decisions

Although a cut in the capital-gains tax remains on the table between Republican leaders and President Clinton, the timing and extent of such a move are unknown.

Most observers expect a tax cut to cover transactions completed since New Year’s, although a different effective date is possible.

But financial advisers say one of the most common investment mistakes is to hold off taking gains to avoid taxes, which you’ll have to pay someday anyway, unless you die first.

Investors who weathered last week’s market can appreciate that fact today.

, DataTimes