Super Bowl Indicator

The Super Bowl Indicator

A Gaggle of Other Technical Theories to Help You Lose Money

Once the academic world polished off most of the standard technical trading rules, it turned its august attention toward some of the more fanciful schemes. The world of financial analysis would be much quieter and duller without the chartists, as the following techniques amply demonstrate:

Why did the market rally in 1989? That’s easy to answer for a technical analyst who uses the Super Bowl indicator. The Super Bowl indicator forecasts how the stock market will perform based on which team wins the Super Bowl. A victory by an NFL team predicts a bull market in stocks whereas a victory by an AFL team is bad news for stock-market investors. Since the San Francisco Forty-niners defeated the Cincinnati Bengals in 1989, the auguries for a stock-market boom were good; again, the market responded correctly by rising smartly during the first half of the year. In the twenty years following the first Super Bowl, this indicator has only been wrong twice.

It failed in 1970 when the Kansas City Chiefs’ (AFL) victory was followed by a bull market in stocks and in 1987 when a victory by the New York giants (NFL) was followed by the stock-market crash (although the market did end 1987 higher that it started). Naturally, it makes no sense that the results of the Super Bowl should be useful as a market forecaster. Nevertheless, chance correlations will always pop up. The success of the Super Bowl indicator simply illustrates nothing more that the fact that it is sometimes possible to correlate two completely unrelated events.

Burton G. Malkiel. A Random Walk Down Wall Street, including a life-cycle guide to personal investing. First edition, 1973, by W.W. Norton and company, Inc.

Super Bowl Indicator. Photo by Elena