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Get Four
|  | FEBRUARY 3, 2005
 MARKET VIEWS By Frank Slusser The Bulls Pull for the Eagles The Super Bowl Theory holds that when the NFC team wins, the S&P 500 is in for a good year. So if the favorite Patriots win, look out Can Donovan McNabb and Terrell Owens pull out a victory in Jacksonville -- for the S&P 500? Wall Street might just be rooting for the underdog Philadelphia Eagles to defeat the New England Patriots in the NFL championship game on Feb. 6 because of a fanciful stock market predictor created 26 years ago: The Super Bowl Theory. The theory, invented by the late New York Times sportswriter Leonard Koppett, says that if the NFC team -- or an AFC team that originally was an NFC member -- wins the game, the stock market, as measured by the S&P 500-stock index, will rise for the year. Conversely, if the AFC team wins, the market will go down. For such an unscientific prognostication tool, the theory has a pretty impressive track record: It has been right 30 out of 38 times since the first Super Bowl in 1967 (so early in the event's history that it didn't even have a Roman numeral attached), or 78.9% of the time. Admittedly, the Super Bowl theory has had something of a mixed record over the past few years. It was thrown for a loss in 2004 by the AFC Patriots' 32-29 win over the Carolina Panthers, as the S&P 500 index rose 9.0%. MISSED CALLS. The theory was on target the two preceding years, however. In 2003, the S&P 500 went up a stunning 26%, no doubt in part because of the NFC Tampa Bay Buccaneers' 48-21 victory over the Oakland Raiders in Super Bowl XXXVII. And in 2002, the Patriots' 20-17 victory over the NFC St. Louis Rams presaged a down market year. Sure enough, the S&P 500 fell about 24%. Before that, though, the theory suffered a Buffalo Bills-like stretch of failure -- four years, to be exact. The market lost ground in 2001 as the AFC Baltimore Ravens, which has NFL roots as the former Cleveland Browns, beat the NFC New York Giants 34-7. And 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. The opposite happened in the previous two years, as the S&P posted strong gains even though the John Elway-led Denver Broncos of the AFC won the championship each time. A few other blemishes have blotted the theory's otherwise impressive record. In 1970, the AFC Kansas City Chiefs won and the S&P gained 0.1%; 1984, the AFC Los Angeles Raiders won, and the S&P rose 1.4%; 1990, when the NFC San Francisco 49ers were victorious, the S&P lost 6.56%. Also, in 1994, the NFC Dallas Cowboys won, but the S&P fell 1.53%. Other fun Super Bowl Theory facts: • When the NFC wins, the S&P on average gains 16.42%. This has been true about 90% of the time. When the AFC wins, the losses are not as severe, only down on average 6.5%; • Pure AFC teams have won 11 of 38 games. Six of those victories coincided with economic slowdowns or recessions. So, should investors phone their brokers on the morning of Jan. 27 to buy call options (bets that the market will go higher) on the S&P 500 if the "Iggles" pull off an upset? Or should they purchase "puts" (bets on a downturn) on the index if Adam Vinateri boots the Pats to yet another miracle finish? Well, as a market predictor, the theory has had a fairly good run. But it would be ludicrous to rely on it as an investing strategy. As we've said before, the Super Bowl Theory is for amusement purposes only. So go ahead and cheer for Philly, or for Belichick's boys. As always, we'll be rooting for the "500." Here's how the Super Bowl Theory has performed in the 38 Super Bowls preceding this year's game:
 Slusser is a senior editor for Standard & Poor's MarketScope All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure Any advice, analysis, or recommendations contained in articles labeled "Insight from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of BusinessWeek Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis, or recommendations that are published by Standard & Poor's. Standard & Poor's and BusinessWeek Online are each units of The McGraw-Hill Companies, Inc. Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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