Despite all the action in Washington these days, there should be a lot of movement and excitement in Houston this Sunday when the New England Patriots take on the Atlanta Falcons in Super Bowl LI.
The Patriots represent the American Football Conference (AFC), while the Falcons are part of the National Football Conference (NFC).
Some football fans and stock-market watchers claims the Dow Jones industrial average moves up when a team from the original National Football League triumphs — meaning a Falcons win is good news for equities.
Likewise, when an original American Football League team wins, the Dow Jones Industrial Average drops — so a Patriots victory is bad news for stocks. (The Dow was trading around 20,050 on Friday.)
“We would be the first to admit that this [Super Bowl] indicator has no connection to the stock market, [and] the relationship is random. But there is also no arguing that the Dow has performed better when NFC teams have won over the past 50 years,” said Ryan Detrick, senior market strategist for LPL Financial, in a report on Friday.
That’s good news for Falcons fans (and Tom Brady haters.)
Another and simpler way to look at the Super Bowl indicator, Detrick says, is to look at the average gain for the Dow after the NFC wins vs. the AFC — and ignore the history of the franchises.
Using this analysis, equities trading on the Dow has had an average price return of 10.9% when the NFC wins compared with just 4.3% with an AFC winner, he points out.
Put differently, an NFC winner is tied to positive returns 82% of the time; the Dow has been up only 61% of the time when the winner comes from the AFC.
Brady, Patriots Bashing
“The New England Patriots have an even worse record for markets than the AFC as a whole,” the LPL strategist explained.