Football Indicators
Submitted by Atlas Indicators Investment Advisors on February 5th, 2021
This weekend the National Football League will award the Vince Lombardi Trophy to the winner of their championship game, the Super Bowl. Millions of Americans will tune in for any number of reasons. Some want to watch the game. Others are there for the commercials. This year, folks might put the match on because there are limited alternatives given the global pandemic. Might we offer up another, albeit light-hearted, rational for plopping down in front of your television: the stock market.
The last time Tom Brady was in the Super Bowl, he and the New England Patriots beat the Los Angeles Rams. At first glance this might not seem important, but regular readers of Atlas’ notes might recall this entry from 2019. In it we reviewed the Super Bowl indicator which has some correlation (although not causation) to American stock market returns. In short, if a team from the old American Football League wins the big game, the market doesn’t tend to respond kindly. That year the Patriots (a charter member of the AFL) won, and the market shrugged of the relationship, ending higher. Why risk it though? The Kansas City Chiefs started in the AFL, while the Tompa Bay Buccaneers were created well after the first Super Bowl, making them a Wall St. favorite.
Others have created indicators around the Super Bowl as well. The whizzes over at S&P Global Intelligence figured out that total points scored correlate to market returns. When the combined score totaled 47 or greater, the market has averaged 15.9 percent. When the scoring total is less, the market’s upside average falls to 7.3 percent. Fortunately, the over-under on the game is 56.5 as both teams have notable offenses. When former champions return to the Super Bowl, returns average 13.8 percent. Guess what? Both teams have won the title before!
Ok, enough with the Tomfoolery. So what does any of this have to do with your portfolio? Absolutely nothing. There is no useful information in this data, just spurious correlation. Regardless of how you spend your Sunday afternoon, know that the outcome of the game will have no impact on how Atlas invests its managed portfolios.