Wall Street is rooting for the Seattle Seahawks to win Super Bowl XLIX on Sunday, and it has nothing to do with New England coach Bill Belichick’s arrogance, quarterback Tom Brady’s perfect hair, or deflategate. It’s all about the Super Bowl Predictor, one of many quirky indicators that purport to show what stocks will do for the year.
No one really believes that the Super Bowl Predictor has any real merit, but it does have an uncanny record of success — better than just about any other formula that investor can use to see into the future.
Here’s how it works: if a team from the National Football Conference or one with origins in the old National Football League wins the big game, you can rest assured that stocks will end in the green for the year. However, if a team from the defunct American Football Conference wins, the market is likely to fall.
Crunch the Numbers
Yes, it sound ridiculous, and serious analysts roll their eyes anytime it’s mentioned. But still, it has an 81 percent accuracy rate, having correctly predicted the direction of the market in 39 of the previous 48 Super Bowl years, including the past six in a row. The last time the Super Bowl predictor got it wrong was back in 2008 when the New York Giants of the NFC edged New England, 17-14, but stocks plummeted following the financial crisis and the Great Recession.
So how have this year’s combatants fared in their previous Super Bowl appearances? Seattle won the title last year, and the S&P 500 (^GPSC) rose 11.4 percent. Seattle lost its only other Super Bowl appearance, in 2006, but the deck was stacked in that game as it faced off against the Pittsburgh Steelers, one of the original NFL teams that moved to the AFC. (The S&P gained 13.6 percent that year) In fact, the success rate of the Super Bowl Predictor depends heavily on the Steelers’ success. They’ve won six Super Bowls — six years that Wall Street couldn’t lose.
This is the Patriots’ sixth Super Bowl. They lost in 1986 to the Chicago Bears (NFC), and stocks rose 14.6 percent. They lost again in 1997 to Green Bay (NFC), and the S&P had one of its best years ever, soaring 31 percent. The Pats went on to win Super Bowls in 2002, 2004 and 2005. The predictor was right on the team’s first championship, as the S&P fell 23.4 percent, but it edged higher in ’04 (up 9 percent) and ’05 (up 3 percent).
Of course, the Super Bowl Predictor is silly. It has no basis in science, fundamental performance, the economy or of the other basic formulas investors use to assess the market. Still, I’m rooting for the Seahawks, just in case.
[source : dailyfinance.com]