A number of quirky indicators have popped up during the year. Some investors believe January’s performance will dictate the market’s performance for the rest of the year. Others believe the outcome of the Super Bowl could determine which direction the stock market will head. The thesis behind the Super Bowl stock indicator is this: If an AFC team wins the Super Bowl, a stock market decline or bear market can be expected by year-end. Conversely, if an NFC team wins, it’s all roses ahead.
Like reading the tea leaves with other non-scientific indicators, investors can rightly assume there have been mixed results using this methodology (if you can call it that). Let’s dive into what investors may want to know about the so-called “Super Bowl indicator” and what it could mean for the market this year.
Understanding the Super Bowl Indicator
Introduced by sports reporter Leonard Koppett, the Super Bowl stock indicator links Super Bowl winners to annual stock market outcomes.
Interestingly, this indicator (imperfect but largely accurate before the dot-com era with a success rate of over 90%) has since become a much less accurate predictor of stock market success. Often considered a tongue-in-cheek tool with no causation, many investors may still engage in a friendly wager over the market’s outcome using this methodology. Like wearing your favorite team’s jersey during the game, it’s foolproof, right?
Last year’s tight Super Bowl between the Kansas City Chiefs and Philadelphia Eagles attracted over 115 million watchers, which broke 2015’s world record. This year’s contest could break those records, with the Chiefs headed back to the penultimate game, facing the San Francisco 49ers. For those who still consider the Super Bowl indicator, the hope is that the 49ers win, given the team’s status as this year’s NFC champions.
Notably, this indicator has struggled in recent years. In 2016, 2017 and 2022, victories by AFC and NFC teams failed to align with market outcomes. From 2004 to 2023, the indicator was correct only 6 times out of 20, challenging its historical reliability.
So, the indicator had a good run. And maybe some contrarian investors will now be looking to make a bet the other way on the markets this year — go Chiefs (?).
What to Make of This Indicator
The outcome of the Super Bowl holds little relevance to the typical market drivers like economic growth, corporate earnings and consumer confidence. The indicator lacks predictive value and is considered coincidental.
The Super Bowl stock indicator has been unreliable over the past decade, proving to be incorrect in six of the seven previous seasons. Gambling of all sorts isn’t something I really focus on when it comes to investing (they’re two completely different things) unless I’m talking about sports betting stocks or something of the like. Thus, this year’s outcome will, as always, have absolutely zero predictive value for what level the stock market ends the year.
The concept of a “Santa Claus rally” or “sell in May and go away” may actually be based on more scientific psychology/positioning dynamics, holding more credence for investors. The Super Bowl stock indicator, while a fun way to place a wager on this year’s market performance, should be used for just that — entertainment purposes only.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
