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Bob Stovall, currently of Wood Asset Management, popularized the Super Bowl stock market indicator, which says that if an old NFL team -- one that was part of the original NFL prior to the 1970 merger of the NFL and AFL -- wins the Super Bowl, the market will rise that year. Stovall claims that this indicator has correctly predicted the direction of the Dow Jones Industrial Average almost 80% of the time.
This year, the indicator pits two old NFL teams against each other. The Bears facing the Colts marks the seventh time that two old NFL teams have faced off in the big game. The six previous times that's happened, the Dow has gone up every time, posting an average gain of 18%.
I've commented on this indicator in the past and agree with those who find it a curious coincidence. But as a New England Patriots fan, I am not now in the mood to contemplate the certainty that an old NFL team will win the Super Bowl next month. When the Patriots were up 21-3 in the second quarter, I was optimistic. But I will admit to fearing a turning point when I saw how the Colts -- which moved to the AFC when the NFL and AFL merged in 1970 -- were able to score right before the end of the first half.
After correctly predicting the market 90% of the time in the Super Bowl's first 31 years, the indicator has had some trouble in recent years. It failed in 2004 after the Dow gained following the Patriots victory over the Carolina Panthers. And the indicator's had only two clean wins in the last nine games. In fact, two of the market's best years followed wins by the AFL-born Denver Broncos over old NFL teams in 1998 and 1999.
I don't believe the Dow will rise 18% this year. But I will be rooting for the Bears!Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, a Professor of Management at Babson College, and editor of The Cohan Letter.
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Reader Comments (Page 1 of 1)
1-22-2007 @ 11:26AM
John Bellanti said...
It is great to finally know that an AfriAmerican will coach a winning Super Bowl team..GUARANTEED. John B
1-25-2007 @ 4:54PM
Glenn said...
I am afraid you are wrong. Since neither coach was born in Africa and moved their citizenship here to the good ol US of A neither are African Americans. They both may have African American heritage but both are Americans just like everyone else born here. I cannot understand why a mans color is an issue anymore. That whole issue should be behind us but I think it will continue to be a problem for our children's children. Just like the stock market, racism is controlled by people who make it what it is. The fact that the Super Bowl has been right almost 80% of the time is a mere coincidence. Nothing more.
1-25-2007 @ 5:52PM
Buddy said...
In response to Glenn, thank you for saying what I have always wanted to say. I am white. I feel guilt for what my ancestors did. However, I do not discriminate, judge others by religion, race or heitage. I make judgements. But, my judgements are upon the character of the person. I cringe when ever the race card is played. Is it possible to forgive and be forgiven? We really need to grow up and get past identifying USA citizens as "Something Else" - American. As far as the stocks and NFL, it is a spurious argument. However, as hot as the market is, I would not short the market. It seems to be quite bullish on its own.
1-26-2007 @ 5:29AM
mac6308 said...
We all have our beliefs and opinions. That's what makes us Americans. I am a veteran of 10-years of the US military. I have given the best years of my life for the freedom of this country. Just the same as these two great Head Coaches of the NFL. We have sacrificed blood, sweat and tears. Lovey Smith and Toney Dungy will be imortalized in the NFL Hall of Fame for being Head Coaches that happen to be the first African-Americans to play in the Super Bowl. Super Bowl XLI! Like it or not, this is our society. The institutions of our country has perpetuated racism. Not people. People use the institutions and traditions to covertly sustain racism. Just the same as these men and many other men before them, history has dictated and reminded us of the first of any thing in the name of African-Americans. We all want to think that we are above the autrocities of our country's past. America has yet to atone. Until then, African-Americans will be the first in a lot of things. The good ole US of A would not be the country that it is without the AfriAmerican! I have yet to see when it was a "problem" being White. I agree with Buddy. I will not short the market. At least for the next 10 months. It's an institution and full of tradition. Most African-Americans know nothing about the Stock Market. That's changing very quickly. At least 85% of the NFL players are of African descent. The 32 teams in the NFL, less than 15%, since Green leaving Arizona, are Head Coaches or from the front office. That is not a good ROI. We are about to witness one of the greatest games in the history of this sport between two of the best Head Coaches of all time!