superbowl indicator for markets

  1. 2,154 Posts.
    Legend: Stock market performance is predicted by the winner of the Super Bowl.
    Origins: Want
    to know if the bulls or bears will be rampaging through the market this year? Popular wisdom says look to the Super Bowl for the answer because a seemingly startling correlation appears to exist between who wins the big game and how the market will perform in the upcoming year. According to the "Super Bowl Indicator," a triumphant team from the old American Football League (now the American Football Conference, or AFC) foreshadows a down market, but a winner from the old NFL (now the National Football Conference, or NFC) means dust off your red cape, because the bulls are coming.

    The Super Bowl Indicator has been on the money 29 out of 36 times, which even by my math represents a success rate of more than 80%. The indicator experienced a recent four-year streak of being dead wrong, though: the 1998 and 1999 victories of the AFC's Denver Broncos augured market downturns that failed to materialize, and 2000 and 2001 wins of the NFC's St. Louis Rams and the AFC's Baltimore Ravens falsely promised favorable years in the marketplace. (For the purposes of this indicator the Ravens count as an NFC team even though they're now in the AFC, because they were the Cleveland Browns before the franchise moved to Baltimore in 1996, and the original Cleveland Browns were an NFL club prior to the 1970 NFL-AFL merger.) However, the triumph of the AFC's New England Patriots in the 2002 Super Bowl correctly presaged last year's dismal stock market performance, as the Dow Jones Industrial Average (DJIA) sank by 16.8% (its worst performance since 1977), and the Nasdaq lost nearly a third of its value.

    A alternate theory linking the Super Bowl to stock market performance in reverse fashion postulates that Wall Street's results can be used to predict the outcome of the game. According to this theory, if the Dow rises from the end of November until Super Bowl game day, the team whose full name appears later in the alphabet will win.

    Although the Super Bowl Indicator is the best known stock market superstition, there are other beliefs endemic to Wall Street. Additional lore from the floor claims it's a bad omen for the market if the Mets make the World Series (which has only happened four times in the last 40 years). It's also supposed to be a bad sign if a horse wins racing's Triple Crown (which has occurred a mere three times in the last 54 years, and not since 1978).

    Some people place their faith in the "January barometer," a theory that says as January goes for stocks, so goes the year. Since 1950, the January barometer has been accurate 46 out of 52 times.

    Impressive numbers aside, all lore of this nature should be taken with many grains of salt. The adage that "correlation does not equal causation" should be kept firmly in mind by those thinking of entering the market over a Wall Street-favorable Super Bowl result.

    Barbara "beware the blue chips 'n' dips" Mikkelson

    Last updated: 23 January 2003

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