Super Bowl Indicator: Origins, Concept, and Market Predictions

The Super Bowl stands as one of the most-watched television events in America, captivating millions annually. Beyond sports enthusiasts, some investors turn to this iconic game to glean insights about the stock market's future using the Super Bowl Indicator.

This playful indicator suggests that the conference affiliation of the Super Bowl-winning team can forecast the stock market's direction for the year ahead. Dive deeper into the origins, history, and the accuracy of this unique market barometer.

Key Insights

• The Super Bowl Indicator is a lighthearted, non-scientific tool for predicting stock market trends.
• Originated by sports journalist Leonard Koppett in 1978.
• An AFC team victory is thought to signal a bear market, while an NFC team win suggests a bullish market.
• Despite its popularity, there's no causal link between football outcomes and stock market performance.

Understanding the Super Bowl Indicator

The premise is straightforward: if an American Football Conference (AFC) team wins the Super Bowl, it predicts a declining stock market (bear market) for the year. Conversely, a National Football Conference (NFC) champion is believed to herald a rising market (bull market).

It's important to recognize that this indicator is more of a fun sports folklore than a genuine financial forecasting tool. Any perceived correlation is coincidental, yet it continues to capture public imagination annually.

Historical Background

Leonard Koppett, a renowned sportswriter for The New York Times, introduced the Super Bowl Indicator in 1978 after noticing that, up to that point, 11 of 12 Super Bowls had correctly corresponded with market directions.

Despite its initial appeal, the indicator lacks any scientific foundation for market prediction. Nonetheless, it remains a popular topic among fans and analysts alike.

Evaluating Accuracy

Between 1967 and 2023, the Super Bowl Indicator demonstrated an accuracy ranging from 63% to 68%, varying by market index. However, from 2001 to 2023, its success rate dropped significantly to approximately 35% to 39%.

Before the dot-com era (1998-2001), it boasted success rates exceeding 90% in forecasting the S&P 500's direction. Yet, as the adage goes, correlation does not imply causation.

Notably, in 2008, despite an NFC team (New York Giants) winning, the market experienced a severe downturn. Similarly, in 2016 and 2017, AFC team victories did not correspond with expected market declines. The trend continued in 2022 when the NFC-winning LA Rams were followed by a nearly 20% drop in the S&P 500. From 2004 to 2023, the indicator was only accurate 6 out of 20 times.

Insider Note

For NFL aficionados, it's interesting that the Pittsburgh Steelers, despite winning all their Super Bowls as an AFC team, were historically counted as NFC due to their original league affiliation dating back to 1933. This nuance has influenced the indicator's calculations and interpretations.

What Does the Indicator Predict?

The Super Bowl Indicator proposes that the NFL championship outcome forecasts the stock market's movement for the year: an NFC win predicts market gains, while an AFC victory signals declines. Though widely discussed each Super Bowl season, it remains an entertaining concept without scientific backing.

Success Rate of the Indicator

As of 2023, the indicator's accuracy stands near 68% based on the S&P 500 Index. The upcoming Super Bowl LVIII matchup between the Kansas City Chiefs and San Francisco 49ers in February 2024 will test whether this trend continues.

Originator of the Indicator

Leonard Koppett of The New York Times crafted the Super Bowl Indicator in 1978, initially observing a strong correlation by classifying teams according to their original league affiliations rather than their current conferences.

Final Thoughts

The Super Bowl Indicator offers a whimsical take on predicting stock market performance based on the NFL's annual championship. While historically showing about a 70% success rate, this correlation is coincidental rather than causal. Its reliability has diminished in recent decades, making it more of a fun tradition than a dependable financial tool.

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