The Saints Super Bowl win last night will have New Orleans singing long past Fat Tuesday, but it might also be a harbinger of bon temps for the stock market.
That would be welcome after last week, which brought fears of a possible European debt default, a dip in the S&P 500 and a nerve-rattling U.S. stock sell-off that pushed the Dow back below 10,000 en route to a 268-point loss.
When a National Football Conference team prevails in the Big Show, as one has done now 23 out of 44 times, the Standard & Poor's 500 Index of blue-chip stocks finishes the year with an average return of 15 percent, more than twice the average return delivered by the index when an American Football Conference team wins, according to Richard Peterson, Standard & Poor's director of markets, credit and risk strategies.
An even better omen is that the Saints claimed its first-ever Lombardi trophy. In years in which teams win the Super Bowl for the first time, the S&P 500 has produced an average return of 20 percent, Peterson said.
But can investors really put their faith in something as irrational as the outcome of an annual football game predicting the stock market?
"Something such as a Super Bowl Indicator is nonsense, but as a statistician, one can't completely discount it," said Patrick Burns whose London-based company, Burns Statistics, provides statistical research to financial traders.
Burns, who has looked into the Super Bowl Indicator theory extensively, said it first gained traction in 1978, following an article in The New York Times by Leonard Koppett. In 2004, Burns scrubbed and studied the data and found that between 1967 and 2003, the NFC-AFC theory was correct 25 out of 37 times, or 68 percent of the time.
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