Business & Investment

Opinion: If the Super Bowl indicator is correct, Bucks, not the chief, will beat the Bulls

Is Tampa Bay’s victory at the Super Bowl this year good for the US stock market? This is an important question for followers of the famous Super Bowl indicator.

The Super Bowl indicator says that if the winner of the game traces its roots to the original National Football League before merging with the American Football League in 1966, the stock will rise, and if the winning team can trace its roots to the AFL, the stock will fall. I’m predicting.

Tampa Bay is an expansion team that joined the NFL in 1976, so neither league has roots. So I had to look through the archives and say the indicators to get an accurate interpretation of what the expansion team wins mean. He was Leonard Copet, a sports writer inducted into the Baseball Hall of Fame.As far as I know, his first mention of indicators Sports news Unfortunately, Coppet, who died in 2003, did not provide consistent advice on how to interpret the expansion team’s victory.

so New York Times 1989 articleFor example, Copet writes that, according to his indicators, stock prices will rise from Sunday to the end of the Super Bowl whenever the winning team is unable to trace its roots to the original AFL. This, in interpretation, suggests a victory for Tampa Bay. It will be bullish for the stock market.

But in another article after Tampa Bay won the Super Bowl in 2003, Coppet wrote in his indicators that he “has nothing to say” about the performance of the stock market that year.

To calculate the indicator performance, I used Copet’s 1989 formulation. The significant rise in the stock market in 2003 has improved the performance of the Super Bowl indicator. However, even with that additional boost, the indicator was worthless. The bearish forecast has increased the probability that the stock market will rise. From indicators rather than as a result of bullish forecasts.

This was very true in 2020. The former AFL team, Kansas City, won the 2020 Super Bowl, and until the end of the year, the S & P 500 did not fall.
SPX,
+ 0.39%

16.4% increase (before dividend).

A record of indicators over decades can be found in the chart below. Note that Copet has calculated the odds since 1978 when he first wrote about the Super Bowl indicator. Up to that point, the S & P 500 had the perfect track record of going up every time the original NFL team wins and going down every time the original AFL team wins. However, calculating the performance of an indicator using the data that was first used to “discover” the indicator in the first place is a big statistical no-no.

So-called real-time testing is the gold standard for statistical analysis. Only in that way can we reduce the possibility that the previous correlation was simply a random fluke. Needless to say, the Super Bowl indicator fails real-time testing.

Oil shop going to heaven

Before leaving the subject of the Super Bowl indicator, I would like to explain one of the more unique comebacks to the analysis presented here. Some argue that the indicators are still valid, even though they admit that statistical records are worthless. Still worth following is that enough ignorant and deceptive investors think it’s worth it.

Coppet himself could hardly put up with this argument. He introduced the Super Bowl indicator as a joke, not as a serious take. Nevertheless, when the indicator became epidemic, he said it was “embarrassment.” Near the end of his life, he wrote that if the indicator could be declared “dead as a door nail,” it would be “salvation.”

Copet’s fight against “jokes” reminds us of another joke that explains his claim. This other was told by Warren Buffett a few years ago. It is believed that Benjamin Graham, the father of fundamental analysis and the author of The Intelligent Investor, told him.

The oil trader died and St. Peter told me that he deserves heaven, but there is no room for it because there are already too many oil traders. The oil company asks if it’s okay to try to open a place for him by persuading some of the oil companies already in heaven to go to hell, and St. Peter agrees. .. Oil companies find oil company practices in heaven and shout to them that oil has been found in hell. Soon their steady flow went straight to hell, and surprisingly, our newly deceased oil company follows them right away. When asked why he turned down the place in heaven, the oil company replied that rumors about oil discovery that you never knew might be true.

Don’t be the butt of a coppet or buffett joke.

Mark Hulbert is a regular MarketWatch contributor. His Hulbert Ratings tracks investment newsletters that pay a flat rate to be audited.He can reach at mark@hulbertratings.com

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Opinion: If the Super Bowl indicator is correct, Bucks, not the chief, will beat the Bulls

http://www.marketwatch.com/news/story.asp?guid=%7B21005575-02D4-D4B5-4572-D2623FE63FBC%7D&siteid=rss&rss=1 Opinion: If the Super Bowl indicator is correct, Bucks, not the chief, will beat the Bulls

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