There are a plethora of effects and indicators, both legitimate and fanciful, that market observer like to reference.
On the more whimsical side of the ledge are indicators pertaining to the World Series and what country cover model of Sports Illustrated’s swimsuit issue hails from. Then there is the January Effect, the scenario where small-caps lead large-caps in the first month of the year, setting the broader market up for a (usually) positive result for the year. The January Effect has earned its stripes because of its penchant for accuracy. [A Different Spin on the January Effect]
The Super Bowl Theory may not have the credentials of the January Effect, but its track record is good enough that one thing is clear: Investors who are not devout Denver Broncos fans ought to cheer for the Seattle Seahawks in Super Bowl XLVIII on Feb. 2.
“The Super Bowl Predictor Theory says that the market will gain for the year if an NFC (National Football Conference) team or an AFC (American Football Conference) team with an NFC origin wins the game, otherwise the market will fall – totally irrelevant items to the market. However, the indicator has been correct 37 of the last 47 years, or 78.7% of the time, on a total return basis for the S&P 500,” according to Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.
“On a stock appreciation basis, 2011 (which lost 0.003% but gained 2.11% on a total return basis), and 1994 (which lost 1.54% and gained 1.32% on total return basis) couldn’t be counted; meaning the count would be 35 of 47, or 74.5%. Either way, 78.7% on a total return basis or 74.5% for stock alone, it is a much better track record than most stock pickers. This year’s game sets the NFC Seattle Seahawks against the AFC Denver Broncos. If Seattle wins the theory says that the S&P 500 will be up this year; if Denver wins the market closes down (its off 0.52% YTD,” notes Silverblatt.