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What Does the Super Bowl Mean for the Markets? (post-game trivia) Thumbnail

What Does the Super Bowl Mean for the Markets? (post-game trivia)

Trivia – What does the Super Bowl Mean for the Markets? 

 

Congratulations to the Kansas City Chiefs for winning Super Bowl LVIII. They were the first team to win back to back Super Bowls since the New England Patriots accomplished it about 20 years ago (2003-2004). The Super Bowl is always a bittersweet celebration as we binge on fried food and salty snacks but wake the next day to the realization that football season is over…for now. Therefore, to cheer up football fans we wanted to offer some interesting tidbits about what the Super Bowl has meant for the financial markets. However, we will reassure you that this is for fun and we do not make portfolio decisions around who wins the Super Bowl.

  • Does the market like an AFC or NFC winner? Going back to 1971 when an AFC team wins the big game (i.e., Chiefs) the S&P 500 posts a slightly less positive return for the year than if an NFC team would have won. On average, the S&P 500 rises 8.6% for the year when an AFC team wins, compared to 9.7% when an NFC team wins. However, it is good to know that the S&P 500 has been positive 72% of the time when an AFC team brings the trophy home.
  • The market does not mind overtime games: Last night was only the second Super Bowl in history to go into overtime. The last game was in 2017 between New England and the Atlanta Falcons. In that year, the S&P 500 rallied 19.4%. When looking at the scores of all the super bowl games and how tight the game was tells a slightly different story. With a score of 25-22, this is the third consecutive Super Bowl where the winning team won by a tight margin (3 points). The average return of the S&P 500 in the years that the difference in the score is less than five points has been 7.8%. This compares to an average return of 9.3% when the difference is more than five points.
  • The stadium matters: This was the first Super Bowl held at Allegiant Stadium in Las Vegas. The S&P 500’s average annual return in the years that the game is played in a stadium for the first time has been 6.5% and it has been positive ~80% of the time. While we know the game is typically played in a dome or warm weather arena, the market does not necessarily like domes like last night’s venue. On average, when the game is played in a dome the S&P 500 has posted a 2.7% return for the year. This compares to the S&P 500 rallying ~11% in the years the game was played in a non-dome arena.       

The Bottom Line: 

As you try to wake up after the late game and recover from the food coma, we hope you enjoyed this fun spin on the markets and the big game. Rest assured that we are not using history about major sporting events and superstitions to let us guide your portfolio allocations. Instead we will focus on fundamentals and valuations. One thing we have learned is that the cost of hosting a super bowl party was a record high. According to the National Retail Federation spending for food, drinks, apparel and decorations was expected to reach a record high ($17.3 billion). Clearly, prices are still rising and we will get crucial information on inflation tomorrow when the Consumer Price Index for January is released. This is likely to move markets as it can give us better insight into the path of the Fed funds rate this year.  

 
Disclaimer:
© 2023 Authored by Megan Horneman, Chief Investment Officer, Verdence Capital Advisors, LLC.   Reproduction without permission is not permitted. The indexes presented are unmanaged portfolios of specified securities and do not reflect any initial or ongoing expenses nor can it be invested in directly. An investment’s portfolio may differ significantly from the securities in the index.
Forty W Advisors is a dba of MacroView Investment Management, LLC (“FORTY W” or “we”, “our”, “us”). FORTY W believes the information and data in this document were obtained from sources considered reliable and correct and cannot guarantee either their accuracy or completeness. FORTY W has not independently verified third-party sourced information and data. Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur. These projections, market outlooks or estimates are subject to change without notice. This material is being provided for informational purposes only and is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice.  Past performance is not a guarantee of future results.    Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product or any non-investment related content, made reference to directly or indirectly in these materials will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any discussion or information contained in this report serves as the receipt of, or as a substitute for, personalized investment advice from FORTY W.