The Betfair Prof / Leighton Vaughan Williams / 09 February 2009 /

According to the conclusions of a paper by Professors Thomas Krueger and William Kennedy, published in the Journal of Finance in June of 1990, if the American football Super Bowl is won by a team from the old National Football League, then the stock market is very likely to finish the year higher than it began.

This seemed good confirmation of an idea first proposed by New York Times sportswriter Leonard Koppett, later published as "The Super Bowl Predictor" by investment advisor Robert H. Stovall in the January 1988 issue of Financial World. On the other hand, the theory goes, if the game is won by a team from the old American Football League, the market will finish lower than it began.

To be precise, Krueger and Kennedy, from the Universities of Wisconsin and North Carolina respectively, document a 91% accuracy rate over the 22-year history of the Super Bowl up to the date of submission of the study in 1988. So what happened in 1989? Well, the NFC team, San Francisco, beat the AFC's Cincinnati, and sure thing - the stock market rose a whopping 27%.

As 1990 arrived, Krueger and Kennedy were on a high and were soon looking forward to watching the stock market rocket after San Francisco won back-to-back Super Bowls, crushing the AFC's Denver Broncos by 55 points to 10.

Then it all went wrong. The stock market fell, only by 4.3%, but a definite decline. The theory of the Super Bowl Stock Market Predictor seemed to have gone the way of the Broncos. Then something remarkable happened. It got it right in 1991, 1992, 1993, 1994, 1995, 1996 and 1997! That makes for a score of 28 correct predictions in 31 calls, a 90.3% success rate.

By 2003, Thomas Krueger had paired up with University of Wisconsin colleague John Sheppard to write a follow-up study. They conclude as follows: "What does appear to be certain is that there is a relationship between which team wins the Super Bowl and the performance of the stock market during that year ... This relationship is significant on both statistical and economic grounds".

Six years later and I'm not so sure. In the 11 Super Bowls contested since 1997, the predictor has got it right six times and wrong five times. Last year's miss was perhaps the most spectacular, the victory of the NFC's New York Giants apparently presaging a stock market surge last year. Well, it didn't happen. And for the first time, the predictor's success rate fell below 80%.

So what about this year? The game itself, between the Pittsburgh Steelers and the Arizona Cardinals, swung from one side to the other right down to the last-minute touchdown by Santonio Holmes, giving the Steelers a victory by 27 points to 23. As it happens, though, you needn't have worried about your equities for the very simple reason that this time around both sides were from the old NFL , pointing to a good year ahead for the Dow Jones. That late touchdown changed nothing.

For the last word, let's hear from the early champion of the Super Bowl Predictor, Robert Stovall. "Used to be, I was only happy when it was over 90% [accurate], and when it was still above 80% I was pleased. But certainly 79% is still far above a failing grade." Indeed!

Professor Leighton Vaughan Williams is the Director of the Political Forecasting Unit and Betting Research Unit of Nottingham Business School, Nottingham Trent University

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