Bears? Colts? The Winner May Be the Bulls
Even if the Chicago Bears win on Feb. 4, bulls should be smiling. For the second consecutive year, equity investors should come out on top regardless of who wins the Super Bowl, be it the National Football Conference (NFC) champion Bears—or their American Football Conference (AFC) opponent, the Indianapolis Colts.
At least that’s what a fanciful stock-market predictor signals. The Super Bowl Market Predictor, invented by the late New York Times sportswriter Leonard Koppett, theorizes the stock market will rise only if the winner is the NFC team or an AFC squad that was previously in the National Football League before its 1970 merger with the American Football League.
The Colts pre-1970 were in the NFL as the Baltimore Colts. The Pittsburgh Steelers, last year’s Super Bowl winner from the AFC, also were originally in the pre-merger NFL. The S&P 500 index gained 13.6% for 2006. Of course, readers should remember that history doesn’t always repeat itself.
The Super Bowl hypothesis has proved correct 30 out of 40 times for a 75% success rate. The S&P 500 gained 3% in 2005, even though the AFC New England Patriots beat the NFC Philadelphia Eagles 24-21, and the economy scored solid gains despite soaring oil prices following the devastation of hurricanes Katrina and Rita. Millennial Dry Spell
The S&P 500 rose 8.99% in 2004 after the Patriots beat the NFC Carolina Panthers 32-29. After the high-tech heyday had peaked, the S&P 500 rose a stunning 26.4% for 2003, perhaps thanks in part to the NFC Tampa Bay Buccaneers’ 48-21 victory over the Oakland Raiders in the Jan. 26 championship game. Of course, the fact that the economy staged a strong recovery that year may have had something to do with it as well.
However, the “500″ fell 23.5% in 2002, and the theory proved right for the first time in five years, as the Patriots beat the NFC St. Louis Rams 20-17.
The stock market lost ground, and the Super Bowl Theory failed for the fourth consecutive time in 2001, as the AFC Baltimore Ravens—who have NFL roots as the former Cleveland Browns—beat the NFC New York Giants 34-7.
The NFC St. Louis Rams’ 23-16 victory over the AFC Tennessee Titans in January, 2000, should have been bullish, but the S&P index fell 10.1% for the year. In the previous two years, the S&P posted strong gains even though the AFC’s Denver Broncos won the championship each time. Historic Exceptions
Other exceptions include 1970 when the AFC’s Kansas City Chiefs won and the S&P 500 gained 0.1%; 1984, when the AFC’s Los Angeles Raiders won and the S&P 500 rose 1.4%; 1990, when the NFC’s San Francisco 49ers won and the S&P 500 lost 6.56%; and 1994, when the NFC’s Dallas Cowboys won and the S&P 500 fell 1.53%.
The Tampa Bay victory in 2003 came as the economy staged a recovery and the effects of the Iraq war had yet to be felt. In the third quarter of 2003, GDP grew 8.2% and raised hopes for continued growth in 2004.
The Patriots’ 2002 win came as the economy continued to slow, heightened by the continued fallout from the high-tech crash. Corporate accounting scandals involving Enron, and others, crushed investor confidence.
Baltimore’s 2001 win came as the economy headed into recession, and the Fed began cutting rates to ease the pain. The September 11 attacks on the World Trade Center in New York and the Pentagon in Washington dealt the economy an unexpected blow. For Entertainment Purposes Only
St. Louis’ 2000 victory occurred when the economy was strong, but the pace slowed later in the year as the high-tech market, which topped out in the first quarter, burst, causing a major downtrend. Fed credit tightening served to put more of a brake on the economy.
The theory has had a decent run as a market predictor. But it would be silly to follow it as an investing strategy. As we’ve pointed out in years past, the Super Bowl Theory is for amusement purposes only.