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Don't Play Up Super Bowl Outcome In Stock Decisions

The New England Patriots just won the Super Bowl.  What does it mean for the stock market?  Unless you believe in a myth, it means absolutely nothing.

The frequently cited Super Bowl indicator is interesting, but hardly scientific. According to lore, when an NFL team from the AFC Conference, like the Patriots, wins the Super Bowl, it will result in a stock market decline for the upcoming year.  Conversely, when a franchise from the NFC Conference, such as the Seahawks, prevails in the championship game, the market will prosper during the year.

Since the Patriots won on February 1, it predicts a down year for the stock market in 2015. 

From a historical perspective, the Super Bowl indicator has been accurate about 80% of the time, based on S&P 500 figures.  But that’s hardly foolproof.  For instance, the New York Giants from the NFC beat the same Patriots in the Super Bowl in 2008.  According to the theory, the stock market should have reacted favorably.  Yet we all know what happened next:  The market hit the skids and began one of the biggest downturns since the Great Depression, when the NFL was in its infancy.

Sure, it’s fun to consider theories like the Super Bowl indicator, but it’s no substitute for sound research and analysis.  Rely on the fundamentals to increase the chances for success.

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