Super Bowl: A Rams victory could boost the markets

If you pray for the Bulls, you better support the Rams.

Sports fans are known to be a rather superstitious bunch with many diehards swearing by a lucky cap, color, number or behavior.

Some will make sure to sit in the same chair or watch a game in the same bar or restaurant. There are those who don’t shave and others who eat certain foods before or during a game. Or maybe they won’t eat at all.

The Super Bowl Indicator

Superstitions will be in full force for Sunday’s Super Bowl as the Los Angeles Rams take on the Cincinnati Bengals.

As one person on Twitter noted, a “superstition is only stupid if it doesn’t work.”

The Super Bowl indicator is a sports-related superstition biased towards the stock market.

First observed in 1978 by Leonard Koppett, sports journalist for The New York Timesthe Super Bowl indicator suggests that the market will be strongly affected depending on whether the NFC or the AFC wins the jackpot.

If the NFC team wins, it is believed, the shares will rise for a full year. However, if the AFC team wins the trophy, the shares will fall.

And for a while, the Super Bowl indicator looked pretty solid. Between 1967 and 2003, this was true 68% of the time.

But belief took a serious beating when a string of AFC teams beat rivals NFC in the economic growth spurt of 2004-07.

However, the indicator rebounded when the NFC victory of 2008 marked the start of a banner year.

So by that logic – and we use the word very loosely – traders should hope the Rams crush the Bengals.

Now, at first glance, investing and superstitions appear to be polar opposites.

After all, the stock market is about research, knowledge, and experience, while superstition is about broken mirrors, black cats, and spilled table salt.

Feed the pigeons

But not so fast. Researchers at Wharton Business School have found that many theories about market volatility have little to do with reality.

Financial management professor Jessica Wachter said in a 2020 interview that “there is no doubt that investors are superstitious.”

Wachter’s study came back to work in the late 1940s by American psychologist B. F. Skinner who showed how pigeons developed bizarre behavioral habits when presented with food at regular intervals.

Since then, research has shown that the behavior of pigeons “illustrates a tendency to create structure out of chance”.

Furthermore, the report states that there is “a strong tendency to find structure where none exists that also characterizes human subjects, both in the laboratory and in real-life situations.”

This pattern persists, the report says, “even when subjects are trained to know what is random and what is not.”

Wachler cited the Friday the 13th fears as an example of “how people like to bring order to things that are essentially unpredictable.”

But hey, it’s just a game, right? Maybe you should just put on your lucky cap, sit in your lucky chair, and enjoy yourself.

“There are a lot of myths and old stories that dominate investing, but unless you are trading on a specific day, the impact should be limited., said Chris Beauchamp, chief market analyst at IG. “Apart from the most active traders, for the average trader these superstitions are primarily for entertainment and should have no real impact on trading..”

About Dianne Stinson

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