The Super Bowl Theory says the S&P 500 should rise in 2007 no matter who wins. But this predictor is only suitable for fantasy investing
From Standard & Poor's Equity ResearchEven if the Chicago Bears win on Feb. 4, bulls should be smiling. For the second consecutive year, equity investors should come out on top regardless of who wins the Super Bowl, be it the National Football Conference (NFC) champion Bears—or their American Football Conference (AFC) opponent, the Indianapolis Colts.
At least that's what a fanciful stock-market predictor signals. The Super Bowl Market Predictor, invented by the late New York Times sportswriter Leonard Koppett, theorizes the stock market will rise only if the winner is the NFC team or an AFC squad that was previously in the National Football League before its 1970 merger with the American Football League.
The Colts pre-1970 were in the NFL as the Baltimore Colts. The Pittsburgh Steelers, last year's Super Bowl winner from the AFC, also were originally in the pre-merger NFL. The S&P 500 index gained 13.6% for 2006. Of course, readers should remember that history doesn't always repeat itself.
The Super Bowl hypothesis has proved correct 30 out of 40 times for a 75% success rate. The S&P 500 gained 3% in 2005, even though the AFC New England Patriots beat the NFC Philadelphia Eagles 24-21, and the economy scored solid gains despite soaring oil prices following the devastation of hurricanes Katrina and Rita.
Millennial Dry Spell
The S&P 500 rose 8.99% in 2004 after the Patriots beat the NFC Carolina Panthers 32-29. After the high-tech heyday had peaked, the S&P 500 rose a stunning 26.4% for 2003, perhaps thanks in part to the NFC Tampa Bay Buccaneers' 48-21 victory over the Oakland Raiders in the Jan. 26 championship game. Of course, the fact that the economy staged a strong recovery that year may have had something to do with it as well.
However, the "500" fell 23.5% in 2002, and the theory proved right for the first time in five years, as the Patriots beat the NFC St. Louis Rams 20-17.
The stock market lost ground, and the Super Bowl Theory failed for the fourth consecutive time in 2001, as the AFC Baltimore Ravens—who have NFL roots as the former Cleveland Browns—beat the NFC New York Giants 34-7.
The NFC St. Louis Rams' 23-16 victory over the AFC Tennessee Titans in January, 2000, should have been bullish, but the S&P index fell 10.1% for the year. In the previous two years, the S&P posted strong gains even though the AFC's Denver Broncos won the championship each time.
Other exceptions include 1970 when the AFC's Kansas City Chiefs won and the S&P 500 gained 0.1%; 1984, when the AFC's Los Angeles Raiders won and the S&P 500 rose 1.4%; 1990, when the NFC's San Francisco 49ers won and the S&P 500 lost 6.56%; and 1994, when the NFC's Dallas Cowboys won and the S&P 500 fell 1.53%.
The Tampa Bay victory in 2003 came as the economy staged a recovery and the effects of the Iraq war had yet to be felt. In the third quarter of 2003, GDP grew 8.2% and raised hopes for continued growth in 2004.
The Patriots' 2002 win came as the economy continued to slow, heightened by the continued fallout from the high-tech crash. Corporate accounting scandals involving Enron, and others, crushed investor confidence.
Baltimore's 2001 win came as the economy headed into recession, and the Fed began cutting rates to ease the pain. The September 11 attacks on the World Trade Center in New York and the Pentagon in Washington dealt the economy an unexpected blow.
For Entertainment Purposes Only
St. Louis' 2000 victory occurred when the economy was strong, but the pace slowed later in the year as the high-tech market, which topped out in the first quarter, burst, causing a major downtrend. Fed credit tightening served to put more of a brake on the economy.
The theory has had a decent run as a market predictor. But it would be silly to follow it as an investing strategy. As we've pointed out in years past, the Super Bowl Theory is for amusement purposes only. So regardless if it's Chicago head coach Lovie Smith or Indy's Tony Dungy hoisting the Vince Lombardi Trophy at the end of the festivities, the stock market will have to rely on other factors to post another "W" for 2007.
Here's how the Super Bowl Theory has performed in the last 40 years:
The Super Bowl Theory—1967-2006
S&P 500 Performance
Green Bay 35, Kansas City 10
Green Bay 33, Oakland 14
N.Y. Jets 16, Baltimore Colts 7
Kansas City 23, Minnesota 7
Baltimore 16, Dallas 13
Dallas 24, Miami 3
Miami 14, Washington 7
Miami 24, Minnesota 7
Pittsburgh 16, Minnesota 6
Pittsburgh 21, Dallas 17
Oakland 32, Minnesota 14
Dallas 27, Denver 10
Pittsburgh 35, Dallas 31
Pittsburgh 31, L.A. Rams 19
Oakland 27, Philadelphia 10
San Francisco 26, Cincinnati 21
Washington 27, Miami 17
L.A. Raiders 38, Washington 9
San Francisco 38, Miami 16
Chicago 46, New England 10
N.Y. Giants 39, Denver 20
Washington 42, Denver 10
San Francisco 20, Cincinnati 16
San Francisco 55, Denver 10
N.Y. Giants 20, Buffalo 19
Washington 37, Buffalo 24
Dallas 52, Buffalo 17
Dallas 30, Buffalo 13
San Francisco 49, San Diego 26
Dallas 27, Pittsburgh 17
Green Bay 35, New England 21
Denver 31, Green Bay 24
Denver 34, Atlanta 19
St. Louis 23, Tennessee 16
Baltimore Ravens 34, N.Y. Giants 7
New England 20, St. Louis 17
Tampa Bay 48, Oakland 21
New England 32, Carolina 29
New England 24, Philadelphia 21
Pittsburgh 21, Seattle 10