Spurious Bowl
Submitted by Atlas Indicators Investment Advisors on February 4th, 2019
Well there you have it, Tom Brady, Bill Belichick, and the rest of the New England Patriots climbed back to the top of the heap on Sunday. Congratulations to all of our readers who were cheering on the G.O.A.T. and Gronk as they moved past the Los Angeles Rams to win the Lombardi Trophy. After the issue with potentially tainted balls a few years ago, many Americans turned their allegiance to anybody but the Patriots, so there are a lot of disappointed folks as the weekend came to a close. But should you, or they for that matter, be disappointed?
According to the Super Bowl Indicator, the answer is probably. This is an old indicator with a relatively accurate prediction record. It goes like this: when a team from the old American Football League (AFL) wins, the coming year is likely to be a loser for stocks. If the winning team was in the National Football League (NFL) prior to the NFL/AFL merger or is an expansion team, an up market tends to coincide. Unfortunately, the Patriots were part of the AFL. But before we all run for the hills, the indicator has not worked in any of the past three years. The Denver Broncos and the Patriots won the Super Bowl in 2016 and 2017 respectively, and the market gained in each of those years. Then last year, the Philadelphia Eagles emerged victoriously, and the market was lower despite the indicator suggesting otherwise. See, it’s not always accurate, so 2019 might work out just fine.
By now you might be wondering how Atlas uses this indicator. In short, we don’t. There is no way we’d try to derive market or economic meaning from an indicator like this. The bad no-call in New Orleans was important to Saints fans but not the American stock market. Any correlation between a stock average’s performance and Super Bowl victories is purely spurious. There is no link between the two phenomena. However, we like to mention the indicator as a reminder that statistics can be manipulative. Atlas believes it is important to dig further into sources and methods before drawing conclusions.
