The future of American equities may be riding on whether the Baltimore Ravens lineage as a successor to the Cleveland Browns makes them an original member of the National Football League.
U.S. stocks do better when the Super Bowl champion can trace its beginnings to the NFL rather than the American Football League, according to Robert Stovall, managing director and market strategist at Wood Asset Management, who started tracking the data more than two decades ago. The Ravens’ 34-31 win over the San Francisco 49ers on Feb. 3 presents a puzzle. The Cleveland Browns, which joined the NFL in 1950, moved to Baltimore in 1996 and were renamed the Ravens.
While U.S. stocks yesterday posted the biggest drop of the year, the Ravens pedigree is good news for the market in 2013, according to Stovall, who said the indicator is right about 80 percent of the time. In last year’s Super Bowl, the New York Giants, a member of the NFL since 1925, defeated the New England Patriots, who were part of the AFL as the Boston Patriots in the 1960s. The Standard & Poor’s 500 Index rallied 13 percent in 2012.
“Would I put my own money in the market based on the outcome of a game? Well, that wouldn’t be the only reason,” Stovall said. “But it makes me feel better to know the Super Bowl predictor is on my side, namely pointing upward this year.”
The last time the Ravens won the Super Bowl, beating the Giants in 2001, the S&P 500 slumped 15 percent through the end of the year. The U.S. equity benchmark advanced 1 percent to 1,511.29 today for the biggest gain in a month.
Stovall’s methodology doesn’t always work. When the Giants beat the Patriots in 2008, the S&P 500 posted the biggest drop since 1937 with a 38 percent plunge as the U.S. housing market collapsed and Lehman Brothers Holdings Inc. went bankrupt.
The Ravens’ history began when they got to Baltimore and considering them heirs to the Browns is wrong, according to Andy Brooks, head of U.S. equity trading at Baltimore-based T. Rowe Price Group Inc. He said the indicator doesn’t apply this year, even though he expects U.S. equities will continue to rise.
“We’re Baltimore’s team,” said Brooks in a phone interview. His firm oversees $576 billion. “We have no claim on the Browns whatsoever. The Cleveland Browns’ tradition, including the indicator, remains in Cleveland.”
The S&P 500 will climb 3.2 percent to finish the year at 1,543, according to the average of 15 Wall Street strategists surveyed by Bloomberg. The U.S. equity benchmark slid 1.2 percent yesterday on concern that the European debt crisis may intensify.
Browns owner Art Modell reached an agreement to move the franchise to Baltimore in November 1995 with the promise of a new 70,000-seat stadium. Following lawsuits from both cities about the fate of the team, an agreement was reached in February 1996 that allowed the move while keeping every aspect of the team’s history in Cleveland. The Ravens franchise was born with former Browns players.
While the Ravens can be considered an offshoot of the Browns, investors shouldn’t take the indicator too seriously, according to Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland. His firm oversees $20 billion. He said stock returns will be “decent” this year.
“It just adds a little bit of fun to the market and gives people a reason to speculate on things,” McCain, who attended the University of California at Berkeley and was rooting for the 49ers, said by phone. “If there are people who take encouragement from it, so much the better for the market.”