Kickoff is now less than a week away, and in the spirit of the Super Bowl Indicator, we wanted to see who the bulls will be rooting for this Sunday night. The Super Bowl Indicator states that if a pre-merger NFL team wins the big game, the market will rally, while a win for an original AFL team is a warning sign that equities are poised to decline. Based on this reasoning (as if anyone who could reason would follow an indicator like this), the Super Bowl Indicator would suggest that a win by the Broncos (an original AFL team) would make an already bad year even worse.
With the expansion of the NFL over the years and the moving of teams between divisions to make things easier, the Super Bowl Indicator has evolved over the years to be NFC (good for equities) vs. AFC (bad for equities). Looking at the overall results, even after 49 years, wins by an NFC team have historically been better for equities than the AFC. In the 26 years where an NFC team has won it all, the S&P 500 experienced an average gain of 10.6% for the remainder of the year with positive returns 80.8% of the time. That compares to an average return of just 4.2% and positive returns 65.2% of the time following the 23 years the AFC won. The S&P 500’s average return from the Super Bowl through year end for all 49 prior years is a gain of 7.58% with positive returns just under three-quarters of the time.
Based on these results, one would think the bulls will be hoping for a big game out of Can Newton next Sunday night, but the table above isn’t the whole story. Below we summarize the average returns of the S&P 500 for teams that have won at least two Super Bowls. Sitting right at the top of this list is the Denver Broncos with an average gain of 21.59%. In 1998 and 1999, the Broncos won Super Bowls XXXII and XXXIII, and the S&P 500 went on to gain 28.4% and 14.8%, respectively, through year end. The Broncos have also appeared in five Super Bowls where they came up short, and in those years, the S&P 500 averaged a gain of just 4.7% from the end of the game through year end. The Carolina Panthers, meanwhile, have never won the Super Bowl, but in the one year they made it (2004), they lost to the Patriots and the S&P 500 gained 7.1% for the rest of the year. So contrary to what the overall results might tell you, based on the past Super Bowl wins and losses of the Broncos and Panthers, don’t be surprised to see the bulls still cheering if Peyton Manning rides off into the sunset next Sunday night with his second Lombardi trophy.