Saturday, January 26, 2013

Win “Win”

Ravens or 49ers – either way, your stock portfolio could have something to cheer about this year.
According to the Super Bowl Theory, which was invented/popularized by the late New York Times sportswriter Leonard Koppett, a Super Bowl win by a team from the old National Football League is a precursor to rising stock values for the year (at least as measured by the S&P 500), but if a team from the old American Football League (AFL) prevails, stocks will fall in the coming year.
As it turns out both teams in Super Bowl XLVII - the Baltimore Ravens (by way of NFL legacy Cleveland Browns) and the San Francisco 49ers – are NFL legacy – and thus, regardless of which team wins, a legacy NFL team will prevail.
Of course, looking back over the years, the record is a bit, shall we say, “inconsistent.” It “worked”for 12 of the first 13 Super Bowls – and, over 45 Super Bowls, it’s proven to be “accurate” 35 times. On the other hand, over the past 15 years, it has only held true about half the time. 

Last year the team from the old NFL (the NY Giants) took on – and took down - one from the old AFL (the New England Patriots, who once were the AFL’s Boston Patriots).  And, in fact, 2012 was a pretty good year for stocks. 
Looking Back

The year before that the Pittsburgh Steelers (representing the American Football Conference) and the National Football Conference’s Green Bay Packers. Both teams had some of the oldest, deepest, and yes, most “storied” NFL roots, with the Steelers formed in 1933 (as the Pittsburgh Pirates), and the Packers, founded in 1919. So, according to the Super Bowl Theory, 2011 should have been a good year for stocks (because, regardless of who won, an NFL team would prevail). But, as you may recall, while the Dow gained ground for the year, the S&P 500 was – well, flat.
Before that, in Super Bowl XLII the underdog New York Giants pulled off a remarkable victory – but the S&P 500 still shed…well, we don’t really need to relive that here (particularly for Patriots fans).

On the other hand, 2010 turned out pretty well for the markets – a year when the New Orleans Saints bested the Indianapolis Colts, though it was, after all, also a Super Bowl featuring two teams with NFL roots. And it was also the case in 2009 when both Super Bowl teams - the Arizona Cardinals and the Pittsburgh Steelers – shared NFL roots (the Arizona Cardinals by way of one time being the St. Louis Cardinals), AND in 2007 when the S&P 500 rose 3.53% as the Indianapolis Colts beat the Chicago Bears 29-17. That also turned out to be the case in 2006 when the Pittsburgh Steelers (yes, again) defeated the Seattle Seahawks in another battle of two legacy NFL clubs. That turned out to be a good year for equities, with the S&P 500 closing up more than 13%.
 

Patriot Gains
Times were better for Patriots fans in 2005 when they bested the NFC’s Philadelphia Eagles 24-21. According to the Super Bowl Theory, the markets should have been down for the year. However, in 2005 the S&P 500 climbed 2.55%.
Of course, the 2002 win by those same New England Patriots accurately foretold the continuation of the bear market into a third year (at the time, the first accurate result in five years). But the Patriots 2004 Super Bowl win against the Carolina Panthers failed to anticipate a fall rally that helped push the S&P 500 to a near 9% gain that year, sacking the indicator for another loss.

Consider also that, despite victories by the old AFL Denver Broncos in 1998 and 1999, the S&P 500 continued its winning ways, while victories by the NFL legacy St. Louis (by way of Los Angeles) Rams (with the just-retired Arizona quarterback Kurt Warner calling plays) and the Baltimore Ravens, which Super Bowl Theory proponents might hope would lead to a positive 2013 outcome for stocks, did nothing to dispel the bear markets of 2000 and 2001, respectively.
Remember of course that it “worked” 28 times between 1967 and 1997 – then went 0-4 between 1998 and 2001 – only to get back on track from 2002 on (purists still dispute how to interpret Tampa Bay’s victory in 2003, since the Buccaneers spent their first NFL season in the AFC before moving to the NFC).

As for Sunday – the oddsmakers are giving the nod to the 49ers – though not by much.
It looks like it could be a good game – and that, whether you are a proponent of the Super Bowl Theory or not – would be one in which whoever wins, we all will!

-          Nevin E. Adams, JD

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