The New England Patriots may very well be the greatest pro football dynasty of all time but one area where they don’t excel is in their impact on the stock market.
A Super Bowl Indicator developed decades ago holds that if an American Football Conference team wins the Super Bowl, the stock market will decline that calendar year. If a National Football Conference team or former NFL team, wins, the stock market will go up.
Despite this indicator having no actual basis in anything that should influence investor behavior or actual stock market returns, it has been surprisingly accurate in the half century since the first Super Bowl. In fact, it’s worked nearly 80 percent of the time or 4 out of 5 years. You’ll be hard pressed to find a more accurate stock market indicator.
As an AFC team, the Pats are bad for the stock market. But they have also been bad for the indicator, accounting for nearly half of the misses. Overall, though, the Pats haven’t busted the indicator but they have been mediocre for the market. In the five times before this year that the Pats won the Super Bowl, the market has gone up four times. But the one year it went down, 2002, lowered the overall average return to +3.38 for the S&P 500. While that’s a positive return, it’s still less than half of the S&P’s average return of 10 percent over the close to century for which we have accurate returns.
Surprisingly, in the years when the Pats lost, the market has averaged an even lower return of +2.01 percent. Two years have really hurt their returns. In 2008, when the Pats lost to the Giants by 17-14 in Arizona, the market dropped 37 percent. In a wining Pats year, 2002, the market dropped 22.1 percent after the Pats beat the then St. Louis Rams 20-17.
Excluding the two big losing years, the market has returned an above average 11.05 in the eight other years the Pats have appeared in the big game.
The conclusion for this year: the market is already off to a good start but may go up or down for reasons that are far removed from Brady and Belichick. While all of this may seem overly whimsical when big money and people’s lives are at stake, most American market participants do take their pro football seriously. And while there is no reason to assign any cause and effect to the Super Bowl Indicator, people move billions of dollars every day on flimsier evidence than this.
