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DJ Tom Brady and the NFC's Win Means Nothing for the Stock Market -- Barrons.com

· 02/07/2021 22:47
By Al Root

The Tampa Bay Buccaneers won Super Bowl 55, defeating the Kansas City Chiefs. Tom Brady's seventh victory extends his record number of wins for any NFL quarterback.

With another NFL season in the books, investors may have to sift through articles Monday morning about what the outcome of the Super Bowl portends for the U.S. stock market. The answer to that question is, simply, absolutely nothing.

The Bucs represented the NFC in the big game. The Chiefs represented the AFC. Super Bowl theory says it is better for the stock market if the NFC wins. With the NFC victorious, investors have clear sailing ahead for the rest of the 2021 -- or at least that's how the theory goes.

With Sunday's victory, NFC teams have won 28 Super Bowls. AFC teams have won 27. In the past 54 years, the S&P 500 has produced a positive return in 23 of the 27 years the NFC has won. The market has gained in 20 of the 27 years the AFC has won. What's more, the average return in years the NFC has won is about 12%. The AFC's return is roughly 9%.

Those numbers make it appear that there may be something to the theory, but the differences amount to random variation. The market has gone up roughly 80% of the time over the past few decades. It rose 85% of the time the NFC won and produced a positive return about 75% of the time the AFC won. The 5% variation from the average, for each conference, doesn't mean much.

The Super Bowl theory really gained steam between 1985 and 1997 when the NFC won 13 straight games. The market, over that span, produced a negative annual return only once and an average annual gain of about 17%. That winning streak boosted the correlation between the NFC and positive stock market returns. But it was correlation without causation.

The Bucs, for their part, have won the Super Bowl once before -- in 2003. That year, the S&P rose about 26%, excluding dividends. That's a very strong return and potentially good news for superstitious investors. But that is a sample size of one -- and therefore essentially meaningless.

If the theory held any water, investors should fear the New York Jets winning a Super Bowl. The Jets have won the Super Bowl once, in 1969. The market dropped 11% that year.

Write to Al Root at allen.root@dowjones.com

(END) Dow Jones Newswires

February 07, 2021 22:47 ET (03:47 GMT)

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