Should stock market investors hope for a 49ers win in Super Bowl LVIII?
Is there actually a difference in the annual performance of the stock market, depending on who wins the Super Bowl? Should you really consider altering your investment plans based on who wins? Let’s explore this interesting question as we approach Super Bowl LVIII (or Super Bowl 58 if you didn’t take Latin in high school).
The Super Bowl
The inaugural Super Bowl took place in January 1967. The Green Bay Packers, who had already won several NFL championships in that decade, beat the AFL champion Kansas City Chiefs. The Super Bowl developed so that the NFL (National Football League) champions could play the AFL (American Football League) champions. The NFL started in 1920, while the AFL began its first season in 1960.
Before the 1970 season, the AFL joined the NFL, forming the NFC (National Football Conference) and the corresponding AFC (American Football Conference). To even out the number of teams in each league, the Pittsburgh Steelers, Cleveland Browns (now Baltimore Ravens), and Baltimore Colts (now in Indianapolis) moved to the AFC.
The Super Bowl & the Stock Market
Oddly enough, if you review data from the past 57 years, a pattern has emerged, which has been called the Super Bowl Indicator. But the pattern doesn’t hold any weight when looking at the past 15 years, which included one of the longest-running bull markets of all time.
Reviewing 57 years of data tells us that when the winner is an NFC team or a former NFL team (Steelers, Colts, or Ravens (formerly the Browns)), the stock market has, more often than not, risen that year. When an AFC team wins, the stock market has fallen more often than not.
That of course, did not happen last year when the Kansas City Chiefs beat the Philadelphia Eagles 38-35 and the DJIA jumped over 14% for the year. And it did not happen the year before when the Los Angeles Rams defeated the Cincinnati Bengals 23-20 and the DJIA dropped more than 8%. But it did happen the year before that when the Tampa Bay Buccaneers beat the Kansas City Chiefs 31-9 and the DJIA rose more than 18%. But it did not happen the year before, when the Kansas City Chiefs defeated the San Francisco 49ers 31-20 in Super Bowl LIV and the DJIA moved up over 7% after having weathered a pandemic-induced bear market earlier in the year. And it did not happen the year before that when the New England Patriots defeated the Los Angeles Rams 13 – 3 in Super Bowl LIII and the DJIA skyrocketed more than 25%. And it did not happen the year before that as the Philadelphia Eagles defeated the New England Patriots 41 – 33 in Super Bowl LII and the DJIA lost about 6%. And it did not happen the year before that as the New England Patriots defeated the Atlanta Falcons 34-28 in what many consider the greatest Super Bowl comeback in history. Remember the DJIA surged more than 25% that year? And the year before? Well, the AFC Champion Denver Broncos defeated the Carolina Panthers 24-10 and the DJIA rose by more than 13%.
So, the Super Bowl indicator has been wrong in six of the past eight years. And in case you’re keeping score, the Super Bowl Indicator was accurate in 2015, 2014, 2012, 2011, and 2010 and very wrong in 2013 and 2009.
In other words, the Super Bowl Indicator has been accurate less than 40% of the time over the past 15 years. Kind of seems like the indicator needs to be reversed. Or maybe it seems more like a coin toss?
So, Where Does This Indicator Come From?
New York Times sportswriter Leonard Koppett originally introduced this “Super-Bowl indicator” in 1978. He observed that in 10 of the 11 Super Bowls at the time, the outcome of the Super Bowl foretold the direction of the DJIA.
He found that, when an old AFL team won, the market fell for the year; when an old NFL team won, the market rose.
Koppett’s observed pattern has, strangely enough, continued to hold true over longer periods of time. For 42 of the 57 Super Bowl years, the Super Bowl Indicator has worked. This means that the Super Bowl Indicator has predicted the annual direction of the DJIA for the year almost 75% of the time. When considering the year-end status of the S&P 500 – considered a more broad-representation of the stock market by many – the Super Bowl Indicator has worked for 35 of the 57 Super Bowl years, for a rate of 61.4%.
No matter how heroic the performances of Tom Brady, John Elway, or Joe Namath, an AFC winner generally did not bode well for the DJIA – sort of.
But maybe a younger generation of AFC quarterbacks (Patrick Mahomes, Joe Burrow and Josh Allen) can start a new trend?
Explanation
One explanation of this so-called Super Bowl Indicator is very straightforward: the DJIA usually increases as it has in 41 of the past 57 years. And the NFC/old NFL teams usually win the Super Bowl, as has happened 39 of 57 times. Both occurred in the same year on 30 occasions.
However, it is still striking that the direction of the DJIA has been predicted accurately almost 75% of the time since 1967 simply by the conference to which the Super Bowl winner belongs.
So, with the San Francisco 49ers as a 2.5-point favorite over the Kansas City Chiefs, does that mean that 2024 is “favored” to witness the stock market’s advance? Or can Patrick Mahomes and the Chiefs reverse the trend?
While there is an interesting correlation between the Super Bowl victor and the stock market, there is of course, no causation.
The Chiefs, Eagles, Steelers, Cowboys, 49ers, and Patriots simply do not have any influence on the DJIA for the year (sounds obvious, doesn’t it?).
Don’t credit the Steelers’ legendary defense or blame the Patriots’ much-celebrated passing game for the direction of the market, unless you find it amusing to do so.
People like to look for patterns in random data because it makes life more interesting. However, the key to successful long-term investing, of course, lies elsewhere. Still, it’s fun to be an armchair analyst/quarterback looking at unique measurements that have nothing to do with traditional financial measures.
Who are you rooting for?