Your country's World Cup loss could quietly tank your portfolio the next morning — even if you didn't watch the game. Here's 1 strange reason why

Historically, stock markets tend to perform poorly during the World Cup, particularly during the “knockout” round of the tournament. But there’s a reason why investors in particular may want to support their home countries this time around, even if they aren’t avid soccer fans.

When a World Cup country loses, its stock exchange goes down

According to a 2006 study published by SSRN — which focused on World Cup tournaments from 1973 to 2004 — a participating country’s stock market tends to produce a significant below-average return one day after its respective team loses in the tournament’s elimination stage.

Now, by that logic, this may lead you to believe that a country’s stock market would see gains after its team wins a World Cup elimination game.

“If that were the case there would be no net effect on the global stock market from this World Cup effect, since by definition there always is the same number of winning and losing teams,” Mark Hulbert reports for MarketWatch.

“But the researchers found no evidence of this second, positive effect. The implication is that, since there will always be a country whose team has lost, the global stock market should be a below-average performer throughout the World Cup.”

That result is reflected in another study, which discovered that during World Cup tournaments between 1950 and 2007, the U.S. stock market suffered an average loss of 2.6%.

The emotional affect

It may be hard to understand why a country’s stock market performance can be so heavily impacted by something as unrelated as the World Cup, but the explanation is quite simple.