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Superstitious investors will be rooting for the Seattle Seahawks to defeat the New England Patriots in Super Bowl XLIX on Sunday, Feb.1.
That's because the "Super Bowl Indicator" tells us a Seahawks victory will propel the markets higher in 2015.
This might sound absurd, but the Super Bowl Indicator is strangely accurate… In fact, it's been right more than 80% of the time.
The Super Bowl Indicator was created in 1978 when a New York Times article showed the correlation between Super Bowl champion and market performance. Originally, the indicator stated that if an original NFL team won the Super Bowl, a bull market would occur that year. If an original AFL team won, there'd be a bear market.
The Super Bowl Indicator has been altered since its conception in 1978. Through the 1970s and 1980s, the NFL vs. AFL lines were followed strictly. But numerous division realignments and expansion teams have blurred the lines.
To make things easier, "experts" now differentiate along the two conference lines. NFC teams represent a bull market and AFC teams represent a bear market. That's why investors will root for the NFC's representative, Seattle.
Just take a look at how many times the indicator has been right…
Super Bowl Indicator: Examining the 80% Success Rate
The Super Bowl Indicator also has an 80% success rate over the past five years:
- Last year the Seattle Seahawks defeated the Denver Broncos 43-8. For the full-year 2014 the Dow Jones gained 8.2%. The S&P 500 rose 11.8%.
- When the New York Giants (NFC) won the Super Bowl in 2012, the Dow gained 5.9% and the S&P 11.5%.
- In 2011, the Green Bay Packers (NFC) won the game and the Dow climbed 5.5% while the S&P remained flat.
- The 2010 Super Bowl saw the New Orleans Saints (NFC) claim victory. The Dow and S&P gained 12% and 14% respectively that year.
- The one time the indicator was wrong in the past five years – in 2013 – the Baltimore Ravens (AFC) were crowned Super Bowl champions and the markets surged. The Dow Jones finished 2013 up 27%. The S&P 500 gained 31%. This is the indicator's only miss in the last five years.
The Indicator has a pretty accurate track record in the Patriots' three Super Bowl victories as well. Two of New England's three wins have been followed by down years for the markets.
After the Patriots won the Super Bowl in 2002, the Dow dipped 18% for the year.
The Patriots won the Super Bowl again in 2004, and that year the Dow performed better, up 4.4%. That year the indicator was wrong.
Following New England's third Super Bowl title in 2005, the Dow finished down 0.6%.
Of course, we suggest putting more research into your investments than simply waiting to see who hoists the Lombardi Trophy. But if the Seahawks win and the market ends higher for 2015, that's yet another winning year for the Super Bowl Indicator.
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