SuperBowl Indicator

Wikipedia
The Super Bowl Indicator is a superstition that says that the stock market's performance in a given year can be predicted based on the outcome of the Super Bowl of that year. It was "discovered" by Leonard Koppett in the '70s when he realized that it had never been wrong, until that point. This pseudo-macroeconomic concept states that if a team from the American Football Conference (AFC) wins, then it will be a bear market (or down market), but if a team from the National Football Conference (NFC) or a team that was in the NFL before the NFL/AFL merger it will be a bull market (up market).

Accuracy
As of January 2017, the indicator has been correct 40 out of 50 times, as measured by the S&P 500 Index – a success rate of 80%.^[1][2] However, since a particular football league winning a Super Bowl and the US Stock market have no real connection this is just a coincidence. Therefore, there is no reason to expect it will work as a predictor of future bull markets.^[3]

The Wall Street Journal

By William Power

Updated Jan. 15, 2016 4:15 p.m. ET 

 

The Super Bowl has done it again.
As illogical as it sounds, for seven years in a row the outcome of the game has foretold the stock market’s direction for the year. Overall, this now has happened after 40 of the 49 Super Bowls, for an 82% completion rate.

Up or down, it is a phenomenon known as the Super Bowl Predictor, and some say its longtime guardian, who is nearly 90 years old (four decades older than the Super Bowl itself), should be in the Hall of Fame by now, either of investing or football.
Wall Street analyst Robert H. Stovall actually is the first to admit that the Predictor has no scientific basis. Still, academics have studied it. And Wall Street has a tradition of quirky indicators, perhaps because serious indicators fail so often.
“There is no intellectual backing for this sort of thing,” Mr. Stovall says of the Predictor, “except that it works.”

Here is what Predictor fans watch for: A win by an original National Football League team—from the days when there was an NFL and an American Football League, before the 1966 merger pact—means the market will be up for the year. A win by a descendant of the AFL sends the market down. Teams created since the merger count for their conference, National or American. (It helps that Pittsburgh, though in the American conference, is an original NFL team, since it has won six times in “up” years.)
It worked again in 2015 as an old AFL team, the New England Patriots, won and the Dow Jones Industrial Average fell 2.2% for the year. The last time the indicator fumbled was 2008 (the New York Giants won, but stocks slid).

The Super Bowl as an investing tool? WSJ's Bill Power joins Lunch Break with Tanya Rivero and discusses how the winner of the Super Bowl has foretold the year's stock market performance for seven consecutive years. Photo: Getty

With NFL playoffs in full swing, the teams that would signal an “up” 2016 if they win it all are Carolina, Arizona, Seattle, Green Bay and Pittsburgh. Bearish teams are those Patriots again, plus Denver and Kansas City.

Robert Stovall, above, says one of his Penn Class of 1948 classmates was an actual football legend, Chuck Bednarik of Philadelphia Eagles fame. ‘Powerful guy,’ recalls Stovall. ‘You’d walk behind him and his arms were so long his hands would go below his knees. A pleasant fellow.’ Illustration: Julie Teninbaum

Mr. Stovall credits a New York Times sportswriter, the late Leonard Koppett, for planting the idea for this “statistical Frankenstein.” Mr. Stovall once marveled that when he was giving serious talks to investors in the 1990s, “that’s what they want to know about.”
For Mr. Stovall, the Predictor has been a sidelight in a long Wall Street life. The Wharton graduate began his career in the 1950s when Elvis Presley was just starting to record. “I got a job as a morning newswire editor at E.F. Hutton & Co., a nice firm at 61 Broadway,” he says, “Mr. Hutton was still alive. I would show up early and write a newsletter picking the major headlines from whatever publications we could get.”
If that sounds like tweeting before computers, he also helped to break ground in financial TV as a regular on “Wall Street Week.” As his 90th birthday approaches, nine days after the Super Bowl on Feb. 7, he is still at work for National Investment Services in Tampa, Fla.
He isn’t rooting for a team, but he hopes stocks rise in 2016. A presidential election is “a fairly good background for some bullishness,” he says. “People are always hopeful that the next one will be better than the one before.”

He says he doubts that his son Sam Stovall, who is S&P Capital IQ’s U.S. equity strategist, will be interested in taking over the Predictor. Too coincidental an indicator, after all.

But the younger Mr. Stovall, 60, says he might surprise his dad and take the handoff. True, the Predictor is “correlation without causation,” he says, but “I think what Pop did is tremendous. He is the one who popularized it.”
Mr. Power is a Wall Street Journal news editor. Email him at william.power@wsj.com.

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