Financial Accounting Blog

Wednesday, January 28, 2004

Super Bowl and Stocks. Would a SuperBowl victory by the New England Patriots signal an end to the current bull market? Maybe. Forbes says that the outcome of the SuperBowl has correlated with the rest-of-the-year stock market direction 81% of the time.
Since the first Super Bowl in 1967, when Vince Lombardi's Green Bay Packers whipped the Kansas City Chiefs, 35-10, the Super Bowl Stock Market Predictor has been an astonishingly accurate--albeit somewhat silly--indicator of stock market direction for the rest of the year. The theory holds that when a team from the original National Football League wins the championship, stocks rise. When a team from the now-defunct American Football League wins, that's bearish. The two leagues merged in 1971, with most original NFL teams in the league's National Conference and AFL teams in the American Conference.

Using the Dow Jones Industrial Average, the S&P 500 Index and the NYSE Composite as market proxies, the prophecy of the pigskin has correctly called the direction of at least two of the three 30 times, while it blew the call seven times. A four-year skid of bum results ran from 1998 to 2001, but the predictor was back on track the last two years. The victory by the AFC's Patriots in 2002 preceded a double-digit drop in the Dow, and last January's 48-21 rout of the AFC's Oakland Raiders by the NFC's Tampa Bay Buccaneers came less than two months before the market staged its dramatic bullish turnaround in March of 2003.