The Super Bowl Indicator

From Gary Alexander at Navellier Market Mail:

Will Seattle Save the Stock Market Again This Year?

Last January, the S&P fell 3.56%, but then Seattle saved the market. On Sunday, February 2, the Seattle Seahawks (the NFC Super Bowl team) thrashed Denver (the AFC team), 43-8. The market immediately turned around. The S&P gained 4.31% in February, erasing all of its January losses, eventually delivering double-digit gains for all of 2014. From Super Bowl Sunday to New Year’s Eve, the S&P gained 15.5%!

The Super Bowl Indicator basically says that the market will go down in a year in which the AFC team wins, and it will go up if an “old-line NFL” team wins. Being from Seattle, I hope our team wins the first back-to-back Super Bowl victories in a decade (since New England turned the trick in 2004-5 – which were both good market years, by the way). But I know better than to mix football and stock analysis.

The first problem with the Super Bowl Indicator is the squishy term “old line NFL.” Seattle is in the NFC now, but it was in the AFC for most of its tortured path to football supremacy. Seattle joined the National football conference in 1976, but then it struggled in the AFC from 1977 to 2001 before rejoining the NFC.

This kind of tortured team history is now common in the NFL. Some other recent Super Bowl winners are currently aligned with the AFC but they are also old-line NFL teams: The Indianapolis Colts (2007 winners) were once the Baltimore Colts, while the Baltimore Ravens (the 2013 champs) were once the Cleveland Browns. The Pittsburgh Steelers (winners in 2006 and 2012) are also from the old-line NFL.

The statistical secret of this correlation is that the stock market goes up more than it goes down. Since 1967 (Super Bowl 1), the Dow has risen in 35 of 48 years. In the first 48 Super Bowls, an “old-line NFL” team won 34 contests, so there is bound to be a lot of overlap. But the statistical reality is that if a coin comes up heads 30 of 31 times, the chances it will come up heads on the next toss will always be…50%.

Posted by on January 21st, 2015 at 2:21 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.