[Update: Sell everything]
You might be a Niners fan, but are you a super Niners fan?
Only if you throw everything into equities following a favorable outcome in Sunday’s Super Bowl matchup. It seems the result is a solid indicator (maybe not solid, but …) of stock market performance in the ensuing year.
LPL Financial is out with its annual football/financial analysis and finds, “The Super Bowl Indicator suggests stocks rise for the full year when the Super Bowl winner has come from the NFC, but when an AFC team has won, stocks have fallen.”
While sanely acknowledging the indicator has no actual connection to the stock market, “data don’t lie,” says LPL’s Senior Market Strategist Ryan Detrick.
“The S&P 500 Index has performed better, and posted positive gains with greater frequency, over the past 53 Super Bowl games when NFC teams have won,” Detrick writes. “Of course, it doesn’t always work, as stocks did great last year even though the dreaded AFC Patriots [his words] won the Super Bowl.”
Breaking it down
A “simpler” way to look at the Super Bowl indicator is to look at the average gain for the S&P 500 when the NFC has won versus the AFC—and ignore the history of the franchises, as some have moved between conferences as the league developed.
“As shown in the LPL Chart of the Day, this similar set of criteria has produced an average price return of 10.2% when an NFC team has won, compared with a return of 6.8% with an AFC winner. An NFC winner has produced a positive year 79% of the time, while the S&P 500 has been up only 64% of the time when the winner came from the AFC.”
“The 49ers have won the Super Bowl five times, putting them just behind the six that the Patriots and Steelers have won,” Detrick adds. “The Chiefs, meanwhile, have won the Super Bowl only once, exactly 50 years ago.”
The year the Chiefs won the Super Bowl (1970), the S&P 500 was virtually flat. Meanwhile, we’ve seen some impressive market returns the years the 49ers made it to the big game. In fact, the S&P 500 has averaged nearly 21% in the six years they made it to the final game, and 19% in the five years they won.
“There have been 53 Super Bowl winners, yet only 20 teams account for those wins,” Detrick concluded. “And wouldn’t you know it, the 49ers have recorded the third-best market return out of those 20 teams when they win.”
Here’s a breakdown of the 20 Super Bowl winners and how the S&P 500 has done following their victories:
Detrick and LPL Research reiterate “that in no way shape or form do we recommend investing based on this data,” but those outside of New England can all agree they’re glad the Patriots aren’t in the game [the one point where the analysis clearly doesn’t hold].
Wishing everyone a great Super Bowl weekend.