Fribble

Friday, January 12, 1996
NFL Index Predicts Super Year For Stocks
by MF Flyer

You wouldn't know it from the Tuesday, January 9, investment performance, but 1996 is as close as you get to a sure thing in the stock market!! Foolish prediction?? NO WAY!!! Read further, you doubters.

The Super Bowl Effect guarantees it. But. . . er. . . I'd always heard that the "January Effect" predicted what the year would be like? Read further, you doubters.

According to the unconventional but surprisingly accurate indicator, stocks rise when a team from the National Football Conference or one from the pre-1970 National Football League wins the Super Bowl. It's worked for 26 of 29 Super Bowls. WOW!!! What a record.

And this year, for the first time ever, all four teams still alive in the conference champsionships are designated market winners. The Dallas Cowboys and Green Bay Packers will vie for the NFC championship this coming Sunday; and the Pittsburgh Steelers and Indianapolis Colts, via Baltimore---both members of the original NFL---will compete for the top spot in the American Football Conference.

Football has never given so bullish a signal. At any rate, some investors hope it's true.

"I'd take any positive sign right now," said former Dallas Cowboy Mike Montgomery. Now a PaineWebber stockbroker in Dallas, Mr. Montgomery was reeling Tuesday afternoon after the Dow Jones Industrial Average fell 67.55 points to 5130.13.

A win by the Dallas Cowboys doesn't seem to garner any extra points for the stock market, although some say it's a big boon for the local economy. "Certainly it puts a smile on everybody's face," Mr. Montgomery is quoted as saying.

New York investment adviser Robert Stovall first noticed the correlation between Super Bowl wins and stock market gains in 1979. It's among the most accurate of the dozens of offbeat economic indicators that market watchers follow.

There's the Hemline Index---the shorter the skirt, the higher the market.

Another gauge says that the first five days of January predict the month. (The market rose 80.56 points during that period in 1996.)

And a good January supposedly means the market will be up for the year, said David Johnson, vice president with Smith Barney in Dallas. "Finally, on the sixth trading day of the year, I always wear a blue suit," Mr. Johnson said. "Obviously, we don't believe in any of this folklore---unless it works. And then we light candles to it."

As with any other bold idea---New Coke and the metric system come to mind---skeptics are standing in line to criticize the Super Bowl Effect.

"I just don't want to trust my financial future in any given year to the Indianapolis Colts scoring or not scoring in the last few minutes of a game," said sports talk show host Norm Hitzges. Oh, that skeptic!!

The stock market usually rises no matter who plays in football's biggest blowout, notes Barry Karr, executive director of "Skeptical Inquirer." And the NFL has usually won the Super Bowl. "It's one of those meaningless correlations." Well, we'll just have to wait and see 'bout that, oh Skeptical one.

Recognizing patterns---figuring out, for example, that if the first four lions ate your friends, the fifth might be a threat---is an important survival skill, said John Allen Paulos, author of "A Mathematician Reads the Newspaper" and other books about how people misuse numbers to make a point. "But sometimes we go too far." (Maybe he's being converted to believing in this S.B. Index, too. Oh, I meant to say: Super Bowl Index.)

Why some people even use astrology as a market indicator!! But hey, if our government can use Psychics to predict enemy movements. . .

Buying stocks based on the Super Bowl Effect may be the equivalent of saying that the heavy snow in Washington is God's way of criticizing the government shutdown, said Allen Sanderson, sports economist at the University of Chicago. "If one really could predict stock markets, somebody would have done it," he said.

Some believers suggested that the National Football League might want to license the Super Bowl Effect, turning the New York Stock Exchange into the Official Stock Market of the NFL.

"Jerry Jones might beat us to the punch on that," said NFL spokesman Greg Aiello. "I'm afraid you've given him his next marketing idea." (Yeah, JJ and Deion can do another commercial and maybe say: "Deion, which is it gonna be: "NYSE, AMEX or NASDAQ?? All THREE!!!")

The SUPER BOWL EFFECT on the DOW:

The Dow Jones Industrial Average usually has a positive year following a Super Bowl victory by a team from the National Football Conference or the original National Football League. The following shows the Super Bowl winners and the Dow's gain or loss for the year, in percentages.

AFC teams not NFC teams or previously in NFL Year and Team former NFL teams

                 67 Green Bay            +15.2%
                 68 Green Bay            + 4.3%
-15.2%           69 New York Jets
                 70 Kansas City          + 4.8%
                 71 Baltimore   *        + 6.1%
                 72 Dallas               +14.6%
-16.6%           73 Miami
-27.5%           74 Miami
                 75 Pittsburgh  *        +38.3%
                 76 Pittsburgh           +17.9%
-17.3%           77 Oakland
- 3.2%           78 Dallas
                 79 Pittsburgh           + 4.2%
                 80 Pittsburgh           +14.9%
- 9.2%           81 Oakland
                 82 San Francisco        +19.6%
                 83 Washington           +20.3%
- 3.7%           84 L.A. Raiders
                 85 San Francisco        +27.7%
                 86 Chicago              +22.6%
                 87 New York Giants      + 2.3%
                 88 Washington           +11.9%
                 89 San Francisco        +27.0%
- 4.3%           90 San Francisco
                 91 New York Giants      +20.3%
                 92 Washington           + 4.2%
                 93 Dallas               +13.7%
                 94 Dallas               + 2.1%
                 95 San Francisco        +33.5%

*In 1970, NFL teams Pittsburgh, Baltimore and Cleveland joined 10 AFL teams to form the American Football Conference.

Let's watch this Super Bowl Effect for this year. . . can't be all bad, and just might startle all those Fund Managers as well.

Kimmarie Clements aka MF Flyer

[Editor's Note: the three incorrect years were 1970, when Kansas City won and the market rose; 1978, when Dallas won and the market fell; and 1990, when San Francisco won and the market fell.]