“Friendship is unnecessary, like philosophy, like art…. It has no survival value;
rather it is one of those things which give value to survival.”
― C.S. Lewis, The Four Loves
This Sunday, somewhere between 100 and 250 million people will watch the Super Bowl live. And in the week of hype leading up to the game, about 100 million articles will be written about whether the Super Bowl winner can predict how the stock market will fare for the rest of the year.
The authors will do some hand-waving about how the Super Bowl winner can’t possibly predict stock market movement. Then they’ll somehow sneak in a phrase—something like, “…and yet it seems to work…”
Many will talk about the indicator, first proposed back in the 1970s by a New York Times sportswriter, the late Leonard Koppett. It suggested that when a team from the original AFL won, the market dropped. And when a team from the original NFL won, the market rose. In fact, it worked 100% of the time for the first 15 years or so.
Most reasonable people understand that this is just a fun case of correlation without causation.
But not everyone is reasonable. Like the First Five Days of January indicator and Groundhog Day, the Super Bowl Indicator lives on.
For those who are wondering, the data shows that the indicator has been correct 41 of 56 times for a “win” rate of 73%. A far cry from its early 100% win rate…
I have even see writers go so far as to say that it works because when an NFC team wins, it means that “manufacturing economy” cities are spending more on their teams. And when an AFC team wins, it means “newer service and technology” economy cities are spending more money on their teams. That explanation may have worked when GM and GE and Exxon were among the biggest companies. But now that MegaTech companies hold four of the five top market cap spots, even that old, thin explanation is out of touch.
Let’s just say, indicators that try to squeeze explanations (causation?) into strange market correlations are for your next cocktail party, not your portfolio.
One of My Favorite Times with Van
Back in 2011 (the 2010 NFL postseason), Van’s beloved Green Bay Packers made it to the Super Bowl. Ever since the Packers’ loss to the Denver Broncos in Super Bowl 31, Van had always promised himself that he’d go to the big game the next time they appeared. So I surprised him with tickets and we flew into Dallas from different parts of the country. Here we are in our Packers’ jerseys after the big win over the Pittsburgh Steelers:
For the record, the market ended lower in 2011, despite the NFC representative winning that year…
I’d love to hear your thoughts and feedback or ESPECIALLY your favorite Van Tharp moment or memory. Just send an email to drbarton “at” vantharp.com.
Until next time…
Great trading and God bless you,
D. R.