Tuesday, January 1, 2008

My Super Bowl Financial Favorite

In this season of endorsements and primaries, I am following the example of many bloggers and announcing my favorite well in advance of the final contest. Unlike other supporters however, I am not endorsing an individual who battles in the political arena, but rather I am backing a group of individuals - those who battle for gridiron supremacy.

By now, many in the sports and financial communities are aware of the "Super Bowl Indicator". Created in part by "longtime Wall Street guru" Robert H. Stovall, the Super Bowl Indicator claims "if an old AFL team wins the Super Bowl, the stock market will decline during that calendar year and if an original NFL team wins, the Dow Jones industrial average will rise". Although some pundits have sought to debunk this predictor, it still carries an over 80% success rate.

As the NFL playoffs begin at the end of this week, and with ten of the twelve 2008 playoff teams tracing their roots to original AFL or NFL franchises, I've decided to pick my favorite based on which team's victory would be best for my portfolio. The following list ranks the teams from most dangerous to my financial well-being to most favorable. (Note: market performance percentages are from the year of the Super Bowl victory, not the year of the NFL championship.)

12. New England (originally Boston) Patriots - Despite a positive gain (3.1%) for the stock market after their last win in 2004, the best team in NFL is bad news for the stock market, with their championship in 2005 preceding a .8% decrease and their 2002 championship preceding a 16.8% decrease in the Dow Jones Industrial Average.

11. San Diego Chargers - Although they don't have the history of the Patriots, the Chargers are an original AFL team and cannot be trusted.

10. Tennessee Titans - The Titans could very well be ranked equivalent to the Chargers, however, in 1997, they shed their original existence as the Houston Oilers and moved to Tennessee. Their relocation does not exempt them from being a potential curse on my early retirement, it only bumps them above the original AFL teams that kept their identities.

9. Jacksonville Jaguars - One of two 1995 expansion teams, the Jaguars play in the AFC and therefore are guilty by association. Without any positive history to the contrary, I cannot trust the Jaguars with the future of my finances.

8. Indianapolis (originally Baltimore) Colts - Although not an original AFL team, the Colts' affiliation to their current conference does put them in bad company. However, they are provided a respite thanks to recent history. Perhaps their realignment after the AFL-NFL merger can explain why 2007 was such an extremely volatile year in the stock market, with numerous triple-digit gains and losses, mortgage industry problems, rising oil prices, and a downtrodden housing market. Despite the inconsistency, the Dow Jones did conclude the year 6.43% higher.

7. Pittsburgh Steelers - Similar to the Colts, the Steelers are also not an original AFL team, having similarly moved from the NFL to the AFC. The franchise's roots may explain the market's friendliness to Steelers' championships. For example, following Steelers' victories, the market climbed 27% after 1974, 15% after 1975, 4% after 1978, 13% after 1979, and 14% after 2006. Despite these successes and subsequent market performances, as a current AFC team, the Steelers remain a risk.

6. Seattle Seahawks - The Seahawks are the opposite of the aforementioned Jacksonville Jaguars. An expansion team in 1976, the Seahawks have not yet won a Super Bowl. However, because of their association with other NFC teams, a Seahawks' championship would be preferred over other less stock-friendly candidates.

5. Dallas Cowboys - A five-time Super Bowl winning original NFL team, the Dallas Cowboys have followed the Super Bowl Indicator's 80% success rate, forbearing four gains and one losing year for the Dow. After a 12.9% increase in the Dow Jones Industrial following their 1971 championship, the Cowboys preceded a 3% decrease six years later. The 1970s would bring an end to the Cowboy inconsistency however, as the team preceded a 10.4% increase after 1992, a 2.1% increase after 1993, and a 17.6% increase after they won it all in 1995. Despite these recent gains however, rooting for the Cowboys is a risk until the appearance schedule of Jessica Simpson is determined.

4. Tampa Bay Buccaneers - Although not an original NFL team, the Tampa Bay Bucs were the forbearers of one of the most successful years in recent Dow Jones Industrial Average history. Following their sole Super Bowl Championship in 2003, the market soared 23.93%.

3. New York Giants - As expected from a team hailing from the home of Wall Street, the New York Giant Super Bowl victories precede good years for the Dow. Following their 1986 championship, the Dow Jones Industrial increased 2.2% and after their 1990 championship, the Dow increased another 16.9%.

2. Washington Redskins - An original NFL team, the Washington Redskins have won three championships in the last 26 years. In those years (1982, 1987, and 1991) the Dow Jones Industrial Average has gone up following each victory, increasing 16.9%, 10%, and 4% respectively. Despite three positive returns after three Redskins' championships, these returns have decreased, discounting them has the best team to root for during the 2007 playoffs.

1. Green Bay Packers - Like the Redskins, the Packers are also an original NFL team. Unlike Washington, however, the Green Bay Packers have been the most consistent favorite of the Dow. Following the Packers' three Super Bowl Championships, the market has increased, gaining 6.2% in 1967, 9.4% in 1968, and 18.6% in 1997. With increasing positive gains after each Packers' title, the market has shown its love for the team from Green Bay. And any love of the market is a friend of mine.

The Green Bay Packers have my endorsement in the 2007 NFL Playoffs.

Go Pack.

Primary Sources:
Super Bowl Stock Superstition, Forbes.com.

Can a Super Bowl Victory Predict a Stock Market Rally? T. Rowe Price Investor, December 2007.

The Super Bowl Indicator, Snopes.com

AFL-NFL Merger, Wikipedia.org

Wall Street Wraps Up 07 in Somber Mood, Yahoo.com

Dow Jones Industrial Adjusted Close, data360.org (used for 1967 and 1968 data only).

Image from dennisflood.com.


MCBias said...

Neat angle; much better than my soon-coming "Um, I like this team because of their colors" NFL play-off post, ha.

Anonymous said...

While the Colts and the Steelers both play in the AFC, they are original NFL teams. They agreed to switch to the AFC at the time of the AFL-NFL merger in 1970. Of course, as you describe each as "saved by recent history", this only strengthens your thesis.

Anonymous said...

The Steelers and Colts (as well as the non-playoff bound Browns) are NOT original AFL teams.

They joined the AFL teams in the newly formed AFC after the AFL-NFL merger.

So the stock market increases after Steeler Super Bowl wins make sense now!

Jordi said...

Anons, thanks for the heads-up. That slipped by me and I apologize. It is fixed now.