Time for the annual Super Bowl-stock market prediction, and this year we turn to Bob Johnson, finance professor at Creighton University.
Bob traces the history of the myth that when a team that belonged to the old National Football League wins the Super Bowl, the stock market gains in the coming year, and when a former American Football League team wins, the market drops.
Based on the Dow Jones Industrial Average, the prediction has been true for 35 out of the 46 Super Bowls, a success rate of more than 76 percent.
This year, the San Francisco 49ers are the former NFL team, and the Baltimore Ravens count as a former AFL team, Johnson argues. (He says that even though the Ravens were moved to Baltimore from Cleveland, where they were called the Browns and were part of the old NFL. The league added an expansion team in Cleveland called the Browns, which Johnson says puts the Ravens into the AFL category.)
Thus, a Ravens victory would bode evil for the market; if the 49ers win, it's time to buy stocks – or so the Super Bowl Market Predictor would indicate.
The predictor was proposed by New York Times sportswriter Leonard Koppett in 1978, when 10 out of 11 previous game outcomes correctly "predicted' the following year's market, and was the subject of a Sporting News column that year, Johnson writes.
Consider 1989, when Joe Montana drove the 49ers 92 yards in the final three minutes to beat the Cincinnati Bengals and the stock market gained 27 percent. NFL wins introduced annual gains averaging 11.6 percent; AFL wins presaged an average annual drop of 2.86 percent.
What's the explanation?
The stock market usually goes up anyway (33 of the past 46 years), and old NFL teams generally win the Super Bowl (33 of 46 years), so the two are likely to coincide more than average – 28 times, to be exact. Since 1966, former NFL teams have won 71.1 percent of the Super Bowls, and the Dow average has grown 71.7 percent of the time. By simple chance, the "predictor" should be correct 59.5 percent of the time. (We'll take the professor's word on the calculations).
But statistically speaking, Johnson says, the 76 percent success rate is "very surprising" because the probability of the indicator being right 35 or more times out of 46 Super Bowls is only 1.41 percent.
"It seems therefore, that the Super Bowl indicator has promise," he says.
Just because the numbers are correlated – moving together – doesn't mean that the football game causes the market to go up or down. "We can conclude that there is a spurious correlation," he says.
Plus, he said, “If enough people believe that Joe Montana saved the stock market, they can make it a reality."