Superbowl and the Stock market

From our friends at SEI comes this timely commentary:
The Super Bowl Indicator

By: Dean Mioli, CPA/PFS, CFP®, CIMA®, CLU

Senior Investment Analyst, SEI Investment & Case Analysis Team

Who do you want to win the Super Bowl?

The answer is the Pittsburgh Steelers, and I say that as a diehard Eagles fan. What’s that? They didn’t even make the playoffs? That’s too bad, and here’s why: every time the Steelers have won the Super Bowl (six times including last year), the stock market (S&P 500) produced double digit returns, the lowest being 15.8 percent and the highest at 37.2 percent after the Steelers’ 1975 victory.

A brief review of football history: in 1970, the NFL merged with the AFL. Under the NFL name, two separate divisions were formed — the original NFL teams became the NFC and the AFL teams became the AFC. The only exceptions to this were the Steelers, Colts, and Browns, three original NFL teams that went to the AFC.

This brings us to the Super Bowl Indicator. It works like this — a championship for an AFC team predicts a decline in the stock market for the coming year, while a win for the NFC means the stock market will go up. Over the years, the Indicator has been relatively accurate for the  original NFL/AFL teams. After the 29 NFL/NFC wins, the S&P 500 has gone up by an average of 16.49 percent. On the other hand, after the 12 AFL/AFC wins, the S&P has gone down an  average 0.67 percent. These numbers don’t take into account expansion teams created since the merger. If you break it down by the current NFC and AFC conferences, the numbers are a bit different, but the NFC still portends better market returns. Their 22 Super Bowl victories were followed by an S&P 500 average increase of 15 percent. The AFC’s 21 Super Bowl wins preceded an annual S&P 500 average of 7.33 percent.

The good news is three out of four of this year’s potential Super Bowl contenders — the Vikings, Saints, and Colts — are from the original NFL. The Jets, the lone original AFL team, are the clear underdogs — Broadway Joe Namath has long since retired.

While connections between Super Bowl winners and stock market performance are probably just coincidence, you have to admit that the results have been surprisingly consistent. Savvy investors may want to put their loyalties aside and root for a team from the original NFL or the current NFC!

Sources: Standard & Poor’s and NFL.com
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only.
Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
There are risks involved with investing, including loss of principal. Information provided by SEI Advisor Network, a strategic business unit of SEI Investments Company.