Bears? Colts? The Winner May Be the Bulls

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

Even 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.

Historic Exceptions

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
Year Outcome Winning Conference S&P 500 Performance
1967 Green Bay 35, Kansas City 10 NFL 20.10%
1968 Green Bay 33, Oakland 14 NFL 7.70%
1969 N.Y. Jets 16, Baltimore Colts 7 AFL -11.40%
1970 Kansas City 23, Minnesota 7 AFL 0.10%
1971 Baltimore 16, Dallas 13 AFC 10.80%
1972 Dallas 24, Miami 3 NFC 15.70%
1973 Miami 14, Washington 7 AFC -17.40%
1974 Miami 24, Minnesota 7 AFC -29.70%
1975 Pittsburgh 16, Minnesota 6 AFC 31.50%
1976 Pittsburgh 21, Dallas 17 AFC 19.20%
1977 Oakland 32, Minnesota 14 AFC -11.50%
1978 Dallas 27, Denver 10 NFC 1.10%
1979 Pittsburgh 35, Dallas 31 AFC 12.30%
1980 Pittsburgh 31, L.A. Rams 19 AFC 25.80%
1981 Oakland 27, Philadelphia 10 AFC -9.70%
1982 San Francisco 26, Cincinnati 21 NFC 14.80%
1983 Washington 27, Miami 17 NFC 17.30%
1984 L.A. Raiders 38, Washington 9 AFC 1.40%
1985 San Francisco 38, Miami 16 NFC 26.30%
1986 Chicago 46, New England 10 NFC 14.60%
1987 N.Y. Giants 39, Denver 20 NFC 2.00%
1988 Washington 42, Denver 10 NFC 12.40%
1989 San Francisco 20, Cincinnati 16 NFC 27.30%
1990 San Francisco 55, Denver 10 NFC -6.60%
1991 N.Y. Giants 20, Buffalo 19 NFC 26.30%
1992 Washington 37, Buffalo 24 NFC 4.50%
1993 Dallas 52, Buffalo 17 NFC 7.10%
1994 Dallas 30, Buffalo 13 NFC -1.50%
1995 San Francisco 49, San Diego 26 NFC 34.10%
1996 Dallas 27, Pittsburgh 17 NFC 20.30%
1997 Green Bay 35, New England 21 NFC 31.00%
1998 Denver 31, Green Bay 24 AFC 26.70%
1999 Denver 34, Atlanta 19 AFC 19.50%
2000 St. Louis 23, Tennessee 16 NFC -10.10%
2001 Baltimore Ravens 34, N.Y. Giants 7 AFC -13.00%
2002 New England 20, St. Louis 17 AFC -23.50%
2003 Tampa Bay 48, Oakland 21 NFC 26.40%
2004 New England 32, Carolina 29 AFC 9.00%
2005 New England 24, Philadelphia 21 AFC 3.00%
2006 Pittsburgh 21, Seattle 10 AFC 13.60%
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