Markets & Finance

Bears? Colts? The Winner May Be the Bulls


The Super Bowl Theory says the S&P 500 should rise in 2007 no matter who wins. But this predictor is only suitable for fantasy investing

From Standard & Poor's Equity ResearchEven if the Chicago Bears win on Feb. 4, bulls should be smiling. For the second consecutive year, equity investors should come out on top regardless of who wins the Super Bowl, be it the National Football Conference (NFC) champion Bears—or their American Football Conference (AFC) opponent, the Indianapolis Colts.

At least that's what a fanciful stock-market predictor signals. The Super Bowl Market Predictor, invented by the late New York Times sportswriter Leonard Koppett, theorizes the stock market will rise only if the winner is the NFC team or an AFC squad that was previously in the National Football League before its 1970 merger with the American Football League.

The Colts pre-1970 were in the NFL as the Baltimore Colts. The Pittsburgh Steelers, last year's Super Bowl winner from the AFC, also were originally in the pre-merger NFL. The S&P 500 index gained 13.6% for 2006. Of course, readers should remember that history doesn't always repeat itself.

The Super Bowl hypothesis has proved correct 30 out of 40 times for a 75% success rate. The S&P 500 gained 3% in 2005, even though the AFC New England Patriots beat the NFC Philadelphia Eagles 24-21, and the economy scored solid gains despite soaring oil prices following the devastation of hurricanes Katrina and Rita.

Millennial Dry Spell

The S&P 500 rose 8.99% in 2004 after the Patriots beat the NFC Carolina Panthers 32-29. After the high-tech heyday had peaked, the S&P 500 rose a stunning 26.4% for 2003, perhaps thanks in part to the NFC Tampa Bay Buccaneers' 48-21 victory over the Oakland Raiders in the Jan. 26 championship game. Of course, the fact that the economy staged a strong recovery that year may have had something to do with it as well.

However, the "500" fell 23.5% in 2002, and the theory proved right for the first time in five years, as the Patriots beat the NFC St. Louis Rams 20-17.

The stock market lost ground, and the Super Bowl Theory failed for the fourth consecutive time in 2001, as the AFC Baltimore Ravens—who have NFL roots as the former Cleveland Browns—beat the NFC New York Giants 34-7.

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. In the previous two years, the S&P posted strong gains even though the AFC's Denver Broncos won the championship each time.

Historic Exceptions

Other exceptions include 1970 when the AFC's Kansas City Chiefs won and the S&P 500 gained 0.1%; 1984, when the AFC's Los Angeles Raiders won and the S&P 500 rose 1.4%; 1990, when the NFC's San Francisco 49ers won and the S&P 500 lost 6.56%; and 1994, when the NFC's Dallas Cowboys won and the S&P 500 fell 1.53%.

The Tampa Bay victory in 2003 came as the economy staged a recovery and the effects of the Iraq war had yet to be felt. In the third quarter of 2003, GDP grew 8.2% and raised hopes for continued growth in 2004.

The Patriots' 2002 win came as the economy continued to slow, heightened by the continued fallout from the high-tech crash. Corporate accounting scandals involving Enron, and others, crushed investor confidence.

Baltimore's 2001 win came as the economy headed into recession, and the Fed began cutting rates to ease the pain. The September 11 attacks on the World Trade Center in New York and the Pentagon in Washington dealt the economy an unexpected blow.

For Entertainment Purposes Only

St. Louis' 2000 victory occurred when the economy was strong, but the pace slowed later in the year as the high-tech market, which topped out in the first quarter, burst, causing a major downtrend. Fed credit tightening served to put more of a brake on the economy.

The theory has had a decent run as a market predictor. But it would be silly to follow it as an investing strategy. As we've pointed out in years past, the Super Bowl Theory is for amusement purposes only. So regardless if it's Chicago head coach Lovie Smith or Indy's Tony Dungy hoisting the Vince Lombardi Trophy at the end of the festivities, the stock market will have to rely on other factors to post another "W" for 2007.

Here's how the Super Bowl Theory has performed in the last 40 years:

The Super Bowl Theory—1967-2006

Year

Outcome

Winning Conference

S&P 500 Performance

1967

Green Bay 35, Kansas City 10

NFL

20.10%

1968

Green Bay 33, Oakland 14

NFL

7.70%

1969

N.Y. Jets 16, Baltimore Colts 7

AFL

-11.40%

1970

Kansas City 23, Minnesota 7

AFL

0.10%

1971

Baltimore 16, Dallas 13

AFC

10.80%

1972

Dallas 24, Miami 3

NFC

15.70%

1973

Miami 14, Washington 7

AFC

-17.40%

1974

Miami 24, Minnesota 7

AFC

-29.70%

1975

Pittsburgh 16, Minnesota 6

AFC

31.50%

1976

Pittsburgh 21, Dallas 17

AFC

19.20%

1977

Oakland 32, Minnesota 14

AFC

-11.50%

1978

Dallas 27, Denver 10

NFC

1.10%

1979

Pittsburgh 35, Dallas 31

AFC

12.30%

1980

Pittsburgh 31, L.A. Rams 19

AFC

25.80%

1981

Oakland 27, Philadelphia 10

AFC

-9.70%

1982

San Francisco 26, Cincinnati 21

NFC

14.80%

1983

Washington 27, Miami 17

NFC

17.30%

1984

L.A. Raiders 38, Washington 9

AFC

1.40%

1985

San Francisco 38, Miami 16

NFC

26.30%

1986

Chicago 46, New England 10

NFC

14.60%

1987

N.Y. Giants 39, Denver 20

NFC

2.00%

1988

Washington 42, Denver 10

NFC

12.40%

1989

San Francisco 20, Cincinnati 16

NFC

27.30%

1990

San Francisco 55, Denver 10

NFC

-6.60%

1991

N.Y. Giants 20, Buffalo 19

NFC

26.30%

1992

Washington 37, Buffalo 24

NFC

4.50%

1993

Dallas 52, Buffalo 17

NFC

7.10%

1994

Dallas 30, Buffalo 13

NFC

-1.50%

1995

San Francisco 49, San Diego 26

NFC

34.10%

1996

Dallas 27, Pittsburgh 17

NFC

20.30%

1997

Green Bay 35, New England 21

NFC

31.00%

1998

Denver 31, Green Bay 24

AFC

26.70%

1999

Denver 34, Atlanta 19

AFC

19.50%

2000

St. Louis 23, Tennessee 16

NFC

-10.10%

2001

Baltimore Ravens 34, N.Y. Giants 7

AFC

-13.00%

2002

New England 20, St. Louis 17

AFC

-23.50%

2003

Tampa Bay 48, Oakland 21

NFC

26.40%

2004

New England 32, Carolina 29

AFC

9.00%

2005

New England 24, Philadelphia 21

AFC

3.00%

2006

Pittsburgh 21, Seattle 10

AFC

13.60%


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