The Super Bowl Indicator

By: Sean Gallagher, CFP®

What if I told you that I could predict the outcome of the US stock market each year with 73% historical accuracy?

You’d probably call me a liar, which is fair (although technically, I’d be 74% accurate if I simply predicted the market would go up every year - but that’s a discussion for another time).

The Super Bowl Indicator is a market phenomenon first introduced in 1978 by New York Times sportswriter Leonard Koppett. His findings revealed that the outcome of the US stock market (measured by the S&P 500 or Dow Jones Industrial Average) could be predicted by the winner of the Super Bowl in the National Football League.

If a team from the National Football Conference (NFC) – or with NFC roots based on when the franchise started – won the Super Bowl, the market would end with a positive return for that year. If a team from the American Football Conference (AFC) won the Super Bowl, that year's market would end negatively. At the time of the report in 1978, the Super Bowl Indicator had a perfect track record (the first Super Bowl was in 1967).

After the report was published, it seemed like a no-brainer – sell your stocks if the AFC team won or buy more if the NFC team won. The superstitions of sports fans and investors can make for a dangerous combination.

Out of 56 Super Bowls through 2022, the Super Bowl Indicator has been right 41 times, equating to about a 73% success rate. Notably, it has been proven wrong in six of the last seven years. The worst year for the indicator would be in 2008 when the New York Giants won the Super Bowl for the NFC, and the S&P 500 rewarded them with a 37% decline over the year.

The message to investors from this “indicator” is that correlation does not equal causation. The conference that the Super Bowl winner represents does not impact the outcome of equity returns for large US companies. Investors often look to attribute market performance to just about anything they see in the news, no matter how absurd or irrelevant the news may be. While coincidences like these may be fun to track, they have no basis for dictating investment decisions.

As a lifelong Giants fan, I was thrilled to see the Chiefs (AFC) take down the Eagles in last night’s Super Bowl. We can only hope that the Super Bowl Indicator continues its string of recent incorrect predictions and the US markets rally in 2023.

Sean Gallagher is a CERTIFIED FINANCIAL PLANNER™ at HIGHLAND Financial Advisors, a Fee-Only financial planning firm that offers comprehensive financial planning, retirement planning, and investment management. Sean graduated from Virginia Tech’s financial planning program in 2018 and successfully passed the CFP® national exam in 2019. As a Financial Planner at HIGHLAND Financial Advisors, Sean works on developing comprehensive financial plans and investment management for all clients.