The Super Bowl indicator is a pseudo-economic indicator claiming the Dow rises for full years when the Super Bowl winner comes from the original National Football League. When a team that played for the old American Football League wins, the Dow falls. Since the two separate leagues of the past preceded the AFC and NFC conferences, expansion teams count based on the conference they play in.

I would be the first to admit that this indicator has no real connection to the stock market and the relationship is random. Nonetheless, the Dow has performed better when NFC teams have won over the past 50 years.

A simpler way to look at the Super Bowl indicator is to look at the average gain for the Dow when a team from the NFC has won versus when AFC teams win — ignoring the individual histories of the franchises.

This similar set of criteria has produced an average price return of 10.9% when an NFC team has won, compared with only 4.3% when there's been an AFC winner.
An NFC winner has produced a positive year for the Dow 82% of the time. The Dow has advanced only 61% of the time when the winner came from the AFC.

The Patriots may be four-time Super Bowl champions, but their victories seem to correlate badly with the Dow's performance. Image: Bloomberg
The Patriots may be four-time Super Bowl champions, but their victories seem to correlate badly with the Dow's performance. Image: Bloomberg

THE MATCHUP
Interestingly, the New England Patriots have an even worse record for markets than the AFC as a whole. Of the eight previous New England appearances in the Super Bowl, the Dow has been up for the full year only 50% of the time, with an average gain of just 0.3%. The years they were champions fared the worst, with an average loss of 4.1%.

Those who love Tom Brady will be glad to see him starting in his record seventh Super Bowl, but those who don’t will be interested to note that markets have actually fallen for the full year 67% of the time (four out of six appearances) that he has started in the big game, with an average loss of 7.2%.

However, to be fair, two of those years were extreme outliers, with 2002 bringing the largest decline in the Dow (17%) since 1977, and 2008 incurring an even larger drop of 34%, the largest since the Great Depression.

And no, even the most ardent Patriots detractors can’t realistically fault Tom Brady or Bill Belichick for the financial crisis.

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"Of the eight previous New England appearances in the Super Bowl, the Dow has been up for the full year only 50% of the time, with an average gain of just 0.3%. The years they were champions fared the worst, seeing an average loss of 4.1%"

So what does this mean for the upcoming Super Bowl? It means investors who buy into this theory should be rooting for the NFC’s Atlanta Falcons — though my LPL colleagues in the Boston home office may disagree.

As an expansion team in the NFC, an Atlanta victory would point toward a positive and above-average year for the Dow. A victory for the Patriots, an original AFL team that now plays in the AFC, would signal a down year and below-average returns.

Whatever happens, make this a reality: enjoy the game and the parties. And be sure to wake up on time for work Monday morning!