By Jamie Bosse
There is an old wives’ tale (or perhaps an old sportscasters’ tale) called the “Super Bowl indicator” that predicts if the stock market will be up or down for the year based on which team wins the big game. The Super Bowl matches up the champion teams from the AFC (American Football Conference) and NFC (National Football Conference) brackets to face off at the end of the regular NFL football season. If the team from the AFC division wins, the stock market will supposedly be down for the year. A win for an NFC team would indicate a bull market for that year, according to this theory. There is obviously no logical reason for the Super Bowl outcome and the stock market to be related, but the Super Bowl indicator has a surprising rate of accuracy – around 80%.
So is it true? The so-called Super Bowl indicator was first introduced in a column by Leonard Koppett in 1978 as a joke. He based the results on the outcomes of the first 12 Super Bowls saying that if an original NFC team won the game, it foreshadowed a good year for the stock market. If the AFC took the title, then stock prices would go down. Turns out, the joke was on him!
There are a few discrepancies in the theory, due to franchise changes, expansions, and mergers in the league. For example, the Pittsburgh Steelers and the Baltimore Ravens are both considered old NFC teams even though they now play in the AFC. There are also many instances where the indicator was just plain wrong. In 2008, despite the New York Giants (NFC) winning the Super Bowl (indicating a positive market year), the stock market suffered one of the largest downturns since the Great Depression.
If you buy into this Super Bowl theory, a win for the Seahawks (NFC) will be good for the markets and a win for the Patriots (AFC) will result in some market turmoil in 2015.
So…who are you rooting for?
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Disclaimer: KHC does not make investment decisions based on the outcome of the Super Bowl. Nothing contained herein should be construed as an endorsement of market theory.