Simple Indicators in a Complicated World

Market folklore provides an easy, but inaccurate guide for investing in today's interconnected and complex market. Indicators based on economic or market behavior may be preferred.

As investors ponder what this year may hold for the markets, the inter-relationships between politics, economics, fiscal policy, monetary policy, and corporate actions can seem very complex. This year could feature seemingly chaotic movements in economic data as we wrote about in our 2024 Outlook. Investors may feel overwhelmed and seek a simple answer, a rule of thumb, to help make decisions when things seem too complicated to analyze.

We don't place any value on market folklore like the "January Effect" or the "Super Bowl indicator," but we are often asked about them during this time of the year. Jittery investors are looking for clarity in an environment where little is certain. We're revisiting these indicators this year to remind investors that they only appear to have stood the test of time.

Super Bowl

Market prediction for 2024: Loss
Historical accuracy claim: 85%

The Super Bowl indicator claims that the stock market goes up for the year when the winner of the Super Bowl comes from the National Football Conference (NFC), but when an American Football Conference (AFC) or expansion team wins, the market falls. Up until the underdog Denver Broncos (AFC) defeated the Green Bay Packers (NFC) in the 1998 Super Bowl, the indicator had been correct in 23 of 27 years, or 85% of the time, as measured using the MSCI World Index.

However, since 1998, the Super Bowl indicator has had a poor record; it has been correct less than half of the time. The most notable failure was the New York Giants' (NFC) upset win in 2008 over the New England Patriots (AFC), which if theory held, predicted a bull run for stocks. Instead, stocks plunged that year as the financial crisis took hold. This year's win by the Kansas City Chiefs on February 11 was widely watched, but not for its forecasting ability.

Super Bowl Indicator not so super at forecasting