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A market-predicting device based on the results of the Super Bowl is back up to an 80% accuracy rate, after working spectacularly in forecasting stocks' direction the past three years.
But funny things happened the last time there was a Patriots-Giants matchup, in 2008. It was the last time that the Super Bowl Predictor of the market didn't work. Will it come through this time?
For 36 of the 45 Super Bowls, the stock market has gone up after a win by an “original” National Football League team (one that traces its existence to before the merger with the American Football League) and gone down when the AFL side prevails. This is an 80% accuracy rate based on the Dow Jones Industrial Average's annual performance.
There's no science to it, but that is still as reliable as it gets for stock forecasting, no video review needed.
It worked again last year, when the Green Bay Packers, an original NFL team, won the game, and the Dow proceeded to grind out a respectable 5.5% gain for the year despite the ferocious pass rush of global economic turmoil. It also worked in 2010 (Saints won, markets were blessed) and 2009 (Steelers, as “original” as there is, brought it home for both Pittsburgh and the markets).
Robert Stovall of Wood Asset Management in Sarasota, Fla., is the veteran market analyst who has popularized the Predictor.
“I don't have any particular expertise in predicting the outcome of sports events,” says the 85-year-old Mr. Stovall, but he nonetheless leans toward a Patriots win, which would mean a down year for the market. “But if the Giants win, a happy feeling should spread through the bulls.”
Let's try to forget 2008, a shocker for both football and the markets. That was the last time there was a Giant-Patriots matchup, and the last time the Predictor fumbled.
The Giants upset the favored Patriots, which should have been bullish–but the markets had one of their worst years ever (down nearly 34% on the Dow). Perhaps the shock of the Giants win just threw everything off. If the Patriots, a bearish team due to AFL roots, had completed their undefeated season ahead of that market debacle, the Predictor would have been a star.
“You don't want to invest your own money based on such a whimsical predictor,” says Mr. Stovall, “but it always makes me feel better when the Super Bowl Predictor points upward.”
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Except this didn’t work in 2004 or 2005 (both Patriots victories). Perhaps the indicator is rather wacky as relates to the Patriots!
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