Creative Touch Imaging Ltd./ NurPhoto/Getty Images
What you need to know
- The McRib will return to McDonald's menus for a limited time this month, an event that has historically coincided with strong stock performance.
- Ritholtz Wealth COO Nick Maggiulli has found that the S&P 500 historically records a higher average daily return on days the McRib is available than when it isn't.
- The "McRib Effect" is a reminder that correlation does not equal causation; McDonald's tends to re-release the McRib at the end of the year, typically an auspicious time for stocks.
McRibs are coming back. Does that mean it's time to buy stocks?
McDonald’s, the fast food chain that is known for their rib-shaped sandwiches announced last month they would be bringing back a special limited edition of this sandwich starting next Tuesday. The promotion typically boosts sales for the fast food giant due to the dish’s scarcity—but the historical performance of the S&P 500 during “McRib SZN” Stocks should also benefit from the return of sandwiches.
Does a pork sandwich from a fast food restaurant deserve to be mentioned in the same breath as other stock market phenomena such as the “Santa Claus Rally” You can also find out more about the following: “Sell in May and Go Away?”
What Is the 'McRib Effect?'
Between 2010 and 2023, the S&P 500 had an average daily return of 0.1% when the McRib was available, compared with 0.04% on days it wasn't, according to Nick Maggiulli, COO of Ritholtz Wealth Management.
Maggiulli first calculated "The McRib Effect" in 2018, when he found that the S&P 500 outperformed by an average of 7 basis points—a basis point is a hundredth of a percentage point—when the McRib was available between 2010 and 2017. The McRib Effect was calculated on an annualized basis. That translates to 19 percentage points.
In 2020 the magnitude of this outperformance decreased to only 5 basis-points, while it reached 6 basis-points last year.
Many have noticed a similar trend with bitcoins (BTCUSD), whose price has increased more than once while the McRib was available. Bitcoin rose in value last November when the McRib was added to McDonald’s’ menus. The financial markets also buzzed as they awaited the approval of Bitcoin ETFs.
The Limits of the 'McRib Effect'
Maggiulli investigated the McRib effect in 2018 to demonstrate the statistical principle of correlation not being causation. As Maggiulli points out, the movement of the stock market is determined by simultaneous decisions made by millions of people, not one single factor—like the availability of the McRib.
McRib is often introduced in the final months of the calendar year. This period has traditionally been considered a favorable time for stocks.
Stocks are a risky investment by nature, which is why it is important to evaluate many different factors when investing in a specific company or a fund that tracks an index like the S&P 500 rather than a single factor—like whether or not a favorite limited-time sandwich is on the market.
You can still enjoy the sandwich even if it is your favorite.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
