Can the Super Bowl be a good indicator of how the market will do in 2023?

As longtime readers of this report are aware, there is an unofficial market indicator known as the Super Bowl Indicator, first introduced in 1978 by Leonard Koppett, a sportswriter for The New York Times. The indicator suggests that if a team from the American Football Conference (AFC) wins, then there is a gloomy outlook for the stock market, defined by the S&P 500 Index (SPX) for the rest of the year. Conversely, if a team that was in the NFL before the NFL/AFL merger OR a team from the National Football Conference (NFC) wins, it will be a positive year for the market.

On Sunday, the Kansas City Chiefs will represent the AFC for the third time in the past four years and the Philadelphia Eagles will represent the NFC for the first time since 2018. After the Eagles won that Super Bowl in 2018, the SPX ended the year with an annual decline of -6.24%, marking a false reading from the Super Bowl Indicator. The Chief’s last victory in 2020 also proved to be a false indicator, as the S&P 500 ended that year up over 16%. Over the last 20 years, this ‘Indicator’ has seen an equal split between right and wrong indications, with the last correct “signal” occurring with the Buccaneers’ win in 2021. However, going back to Super Bowl I, it has been correct about 70% of the time. Pure coincidence? Almost certainly. But if you don't have an allegiance with either team playing Sunday, you may want to cheer for the Eagles to take home the Lombardi trophy in hopes this will lead to positive domestic equity returns throughout the rest of the year.