Soccer.istock-200x300The beautiful game of soccer celebrates with the kickoff of the World Cup tournament in Brazil tomorrow.  The entire planet will be watching and so will Wall Street.

This once-every-four-years affair attracts die-hard and casual fans alike.

Now investors can get in on the act too.

According to Goldman Sachs, the stock market of the winning World Cup country experiences a rally that can and should be traded.

In the month after a victory, the winning country outperforms the rest of the global market by a whopping 3.5%.That is a significant edge that can help boost your returns, assuming you know who the winner will be.

Even if the euphoria of victory lasts for only a month, there is an advantage to be had in playing these World Cup trades.

In short, to take advantage of this phenomenon, simply buy the country ETFs of the nations expected to take home the prize.

This year the odds-on favorite is Brazil. That makes iShares MSCI Brazil (NYSE: EWZ) a potential winner, should the host country win it all.

Because the winning country rally effect is short-lived, investors can turbocharge the impact by purchasing a Call option on the Brazilian exchange-traded fund.

To do so, look for the option expiring a month after the victor is declared in July. That would make the August expiration contracts your target.

Shares of EWZ have been in full-out rally mode since March, but that rally will likely continue if indeed Brazil can win the World Cup.

Goldman’s prediction is that Brazil has a near-50% chance of doing just that making this trade a possibility now in advance of the winner being determined.

Brazil or Argentina?

Also high on Goldman’s list of nations favored to win is Argentina. One can expect the  euphoria of victory-filled rally to take stocks there higher for at least a month after the championship.

The exchange-traded fund option here is the Global X FTSE Argentina 20 (NYSE: ARGT).

Investors who want to ride an Argentinian win of the World Cup will take on a bit more risk as Argentinian stocks can be volatile, but like Brazil, the ARGT has been in rally mode since early 2014.

Unfortunately, there are few if any options traded on the ARGT, thus such a leveraged trade is off the table here.

Investors will have to be satisfied with the simple outperformance that comes from the month-long rally that would follow an Argentinian victory.

A hit for runners-up

But, be careful as there is a negative effect to losing the World Cup too.

Returns in the runner-up category, according to Goldman, lags the global market as sullen followers of the losing team sulk. That negative psyche translates to underperformance as compared to other global markets by 5% for the three months after the loss.

Deutsche Bank has its own predictions for the World Cup.

Interestingly, they have France as 7% favorite while current lines makers have the French at much lower odds.

From a betting perspective, that state should be viewed opportunistically. From an investing standpoint, not so much.

The reality is that predicting the winner of the World Cup will be quite difficult.

Perhaps the best advice is to watch the event unfold from the sidelines. Then when the Champion is announced, go ahead and make your trade.

If human emotion and behavior move markets, there are few events like winning the World Cup.

If you are patient, you can swoop in and make some money on that euphoric if short-lived move higher of the winning country.

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