Football Could Determine the Market’s Direction
|Written by Rob Goldman|
It Is Right Nine Out of Ten Times
To put it in perspective, this indicator has been right 85% of the time since 1967!
The Super Bowl Indicator is a prediction tool that purports to accurately forecast whether or not the market will rise or fall, based upon the winner of the current year’s Super Bowl. If the winner of the Super Bowl traces its roots to the old National Football League (pre-NFL-AFL merger), it is a sign that the market will rise. If the winner traces its roots to the AFL, it is a sign that the market will likely decline.
There have been 45 Super Bowls since 1967 and teams that trace their roots to the old NFL have won 32 times. The market has risen in 27 of those 32 years.
On the other hand, teams that trace their roots to the old AFL have won 12 times, with the market rising only 6 out of those 12 times. (We exclude the Tampa Bay Super Bowl win as it joined the league post the merger.)
But, it is so much more than just being right 27 out of 32 times. It is the magnitude of the wins and losses.
As illustrated above, when NFL-based teams have won, and the market has risen (which has happened 27 out of 32 times), the S&P 500 Index has jumped an average of 13.2%. Conversely, in the six declines measured by the AFL-led winning teams, the Index dropped an average of over 15%.
Armed with these historical performance statistics, it is clear we should root for traditional NFL teams to win the Super Bowl on February 5, 2012. A quick glance at the 12 teams in the playoff hunt for the football trophy illustrates that the odds are in our favor.
Eight of the twelve teams, including all of the NFC-based teams, trace their roots to the old NFL. Three AFC teams, the New England Patriots, Denver Broncos, and Cincinnati Bengals were all originally AFL teams. The Houston Texans are a recent expansion team, with no ties to either side.
Four of the 12 (including 2 non-NFL teams) have not won a Super Bowl before, so we should probably not root for these teams. If history is our guide, we should hope for a Packers, 49ers, or Steelers win, as these teams have won a combined 15 Super Bowls (one-third of all of them) and the market has risen an average of nearly 20% in each of those years.
We should root against the AFL-based Patriots, one of the favorites, and the only real threat to the indicator this year, as the market has dropped an average of 4% in the years of each of their wins. Alas, the market dropped 13% the year my Ravens won, but that was 2001, and I would think we should throw that out and stick them in with the 3 Super Bowl kingpins.
So, come February 6th, we could be feeling pretty good about our prospects. In the meantime…
January Effect Picks
…we are big believers in The January Effect and expect that small caps will have a strong 2011, led by the start of this new year. QC Holdings (NASDAQ - $4.02 – QCCO), Spark Networks, (NYSE:AMEX - $3.80 -LOV), and SunSi Energies, (OTC:QB - $3.80 – SSIE) are our top 3 January Effect recommendations.
We originally recommended SSIE at a price of $3.10, QCCO at a price of $3.80, and LOV at $3.30.
Until next week…
Analyst: Robert Goldman
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
During 2011, the Firm was compensated by SunSi Energies $8,000 for its research services. Please read the disclaimers found on the initiation reports for compensation disclosure and research subscription terms.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This report or newsletter does not take into account the investment objectives, financial situation, or particular needs of any particular person. This report or newsletter does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with the FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com