The Big Game
It’s that time of year again; Super Bowl 55 has arrived!
What’s that? You don’t like football?
Well you better watch anyways, because the winner of the Super Bowl will determine if stocks are heading up or down in 2021.
Are you Tampa Bay Buccaneers fan? You might want to start buying stocks.
Kansas City Chiefs fan? Better start selling.
The Super Bowl Indicator
Okay, so the winner of the Super Bowl won’t really have any effect on stocks – but there is a very interesting phenomenon going on (even if it is random).
It’s called the Super Bowl Indicator:
This means that a victory by the Chiefs on Sunday would send the stock market into negative territory for the rest of the year. However, if the Bucs come through with the win, then the stock market will rise by the end of the year.
Success Rate
Incredibly, the Super Bowl Indicator has had a near 75% success rate, correctly predicting the direction of the Dow Jones Industrial Average’s movement in 40 of 54 Super Bowl years.
As you can see, the Super Bowl Indicator hasn’t been the most accurate the past few years. But let’s be honest, not many people expected the Dow to return over 7% last year either!
The Super Bowl Indicator was popularized by Wall Street analyst Robert H. Stovall, who credits the original idea for the indicator to a NY Times sportswriter, Leonard Koppett, who discovered the correlation back in 1978.
The Super Bowl Indicator is actually a great example of correlation without causation, also known as a spurious relationship.
Super Bowl LV: The Kansas City Bears vs. The Tampa Bay Bulls
But correlation without causation doesn’t mean we can’t have fun with the Super Bowl Indicator.
With the DJIA essentially up ever so slightly this year, I’m guessing that Super Bowl LV is gonna be a close one!
What do you think?
