The Super Bowl Indicator predicts the stock market will end the year higher if a team from the National Football Conference (NFC), this year the Philadelphia Eagles, wins the Super Bowl. If, on the other hand, the team from the American Football Conference (AFC), the Kansas City Chiefs, win, stocks will decline for the year.
This theory was promulgated by Leonard Koppett, a New York Times sports reporter, in the late 1970s. From 1967-2015, the indicator was correct all but nine times, posting an impressive 82% accuracy rate. At the end of 2022, the indicator has been correct 41 out of 56 times, for a success rate of 73% – according to Forbes.com.
Searching for patterns is popular in both sports and investing (and we’re not talking about technical analysis and charts here). Other historical stock market “indicators” have included the Sports Illustrated Swimsuit Indicator – stocks do better when an American is on the cover, and the Hemline Theory – stocks rise or fall along with skirt lengths. Patterns and correlations can be found in all sorts of things, especially when they are being looked for.
We wrote on this topic for an amusing aside and to have some fun with a conversation that continues to generate headlines every year around Super Bowl Weekend. While an entertaining diversion, it also leads to an important point – correlation does not imply causation . Correlation between two variables does not necessarily mean that one variable causes the other to occur. We can say with certainty, the winner of a football game does NOT cause the stock market to do advance or decline for the year.
Whatever the stock market does this year will have nothing to do with the fact the Kansas City Chiefs won Super Bowl 57. Corporate earnings, valuations, the health of the economy, interest rates, inflation, consumer confidence, monetary policy, fiscal policy, geopolitical affairs, etc. – determine market direction and magnitude. To conclude, we hope you simply enjoyed the game and that your preferred team won, even though we were rooting for the Eagles!
Please contact us with any questions or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC