The big game
It’s that time of year again; Super Bowl 55 is here!
What’s this? Don’t like football?
Well, you better watch anyway because the Super Bowl winner will determine whether stocks go up or down in 2021.
Are you Tampa Bay Buccaneers? Fan? You might want to start buying stocks.
Kansas City Chiefs fan? Better start selling.
The Super Bowl indicator
Okay, so the Super Bowl winner doesn’t have any real impact on the stocks – but there is a very interesting phenomenon (even if it’s random).
It’s called the Super Bowl Indicator:
This means that a Chiefs win on Sunday would drive the stock market into negative territory for the remainder of the year. However, if the Bucs get away with the profit, the stock market will rise by the end of the year.
Incredibly, the Super Bowl Indicator almost got it 75% Success rate that correctly predicts the direction the Dow Jones Industrial Average will move in 40 from 54 Super Bowl years.
As you can see, the Super Bowl indicator hasn’t been the most accurate in the past few years. But let’s face it, not many people expected the Dow to return over 7% last year too!
The Super Bowl Indicator was popularized by the Wall Street analyst Robert H. Stovall, who attributes the original idea for the indicator to a NY Times sports journalist Leonard Koppett, who discovered the correlation back in 1978.
T.The Super Bowl indicator is actually a good example of this Correlation without causality, also known as wrong relationship.
Super Bowl LV: The Kansas City Bears versus the Tampa Bay Bulls
But correlation without causality doesn’t mean we can’t have fun with the Super Bowl Indicator.
With the DJIA essentially up that slightly this year, I am guessing the Super Bowl LV is going to be close!
What do you think?