Can The Big Game Predict Big Profits For Wall Street?O
When it comes the Super Bowl, everybody has their traditions. Whether it’s making a favorite homemade dip, a gathering of friends at a particular sport’s bar, or just simply watching the commercials. Heck, even WS has one, the Super Bowl Market Indicator which has an 80% accuracy predicting the direction of the S&P 500 over its 45 year history. Further Benjamin Alamer, Professor of Sports Management at Menlo College and author of Sport’s Analytics claims to already know this year’s winner! So what does this mean for the S&P 500? Read on to get the answers to this question and more …
WHAT IS THE SUPER BOWL MARKET INDICATOR?
Once upon a time way back in the last millennium there were two U.S. football associations, the National and American Football Leagues which merged and expanded in A.D. 1967. So the forecast goes, when an old national league team wins the “Bowl” the S&P 500 will be positive for the year and if an old american league or expansion team wins then the index will be negative.
However, this year is quite different because both teams are from the old national league. The 49ers were originally an expansion team from 1950 while both the Baltimore Colts and the Ravens (sold by Cleveland in 1996) are originally from the old national league any way you dice it. However, as probability would have it, this time if either team wins, the S&P 500 will be positive for the year but will it?
WHERE DID IT ORIGINATE FROM?
The Super Bowl Market Indicator, originally called the Super Bowl Index was created by Leonard Koppett, a sportswriter and amateur statistician in a satirical 1978 Sporting News article on sports statistics.
Originally his data set consisted of of 11 observations and a perfect correlation coefficient but it has further shortcomings. More recently, the lastest old national league team to win the “Bowl” was the 2008 Giants which was a negative year for the S&P 500 and before that it was the 2001 Ravens which saw an 11% drop in the index that year.
A MORE ROBUST MODEL?
Benjamin Alamer HAS CAREFULLY constructed a statistical model based upon his work and he’s got a more realistic 68% accuracy rating. Further, last year he officially called for the Giants wining the Friday before the "Bowl" and although the magnitude of points were incorrect the spread was only off by three. So what's his prediction...The 49ers!
But why not the Ravens? Simple, according to his blog he says it comes down to long ball statistics. The 49ers have a greater percentage for- and against- the long ball than the league average while the Ravens are slightly below average against- it and Flacco is signficantly less effective than Kaepernick in using it…
SO HERE'S THE TAKEAWAY...
Sports has a wide popularity and it's no suprise that Super Bowl XLVII I'm sure has already made plenty of "buzz" among Analyt's cubicle's at IB's. So I tend to agree with Sam Stovall of Wood Asset Management who thinks that the Super Bowl Index is a fun indicator and further...
It shows first off that [people], you know, have an interest and a life outside of Wall Street - they are big sports enthusiasts.”