Stock-market researchers have noted what they call the “Super Bowl Indicator.” Popular folklore holds that if an old National Football League team wins the big game, the stock market will close up for the year. Victory for an old American Football League team foreshadows a bear market in stocks for the rest of the year, according to the theory.
Like many urban legends, this one may have a grain of truth behind it. The health of the overall economy may offer a reason to explain why the Super Bowl indicator could work.
Old NFL teams, such as the Chicago Bears, Pittsburgh Steelers and Cleveland Browns, are Rust Belt cities with economies dependent upon manufacturing.
The upstart AFL, when it began playing football in the 1960s, placed franchises in then-booming cities dependent upon the new economy, such as oil in Houston or technology in Oakland. Some AFL franchises went owners with new money fortunes like the Hess family, which owned the New York Jets.
When the old economy does well, fans in those cities have good jobs and feel good about their prospects. They fill the stadiums of the home team, and fill the coffers of their teams with cash needed to sign great players to win the Super Bowl.
As the new economy does better, we see their teams dominate the game, and the manufacturing companies that dominate the Dow Jones Industrial Average do worse, resulting in a bad year for stocks.
Two old NFL teams are set to meet in Super Bowl XLV. The Super Bowl Indicator is already forecasting an up year for stocks, no matter which team triumphs.
Of course real investors should use economic data, rather than football scores, to actually invest real money.
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