Fabled market predictor is far less accurate when attendance falls below average.
Football’s big showdown has rolled around again, and with it the recurring editorial need to dredge up ways to tie sports to the stock market.
In other words, it’s time to talk about the Super Bowl indicator, the implausible but entertaining tool that attempts to link the calendar year’s stock market returns to the outcome of the big game.
For those playing at home, the premise of the indicator is that if a team from the old NFC, or one with NFC roots wins the game, the Dow Jones Industrial Average goes up for the year, whereas if a team from the old AFC team wins, the index falls.
Over the past 53 years, the indicator of the market’s direction has been right 40 times and wrong 13. That gives it a success rate of basically 75%. The success rate has suffered in the recent past, as the indicator has failed four years in a row, its longest streak of failures.
There are circumstances when the indicator is more successful, however, such as when a team from the NFC, or one with NFC roots, won. NFC teams have won the Super Bowl 37 times, indicating the market would rise that year. In those years the indicator has been correct 31 times, giving it a success rate of nearly 84%.