Ravens Win a Loss for Investors?
The Super Bowl has come and gone and the Baltimore Ravens are the champs.
Ray Lewis' final play of his career was in successful defense of a 49ers push to take the lead late in the game, helping seal a storybook ending for the legendary linebacker.
With that, the city of Baltimore has something to cheer about, but investors do not.
Why should investors be leery of the Ravens win? This is because of the Super Bowl Predictor Theory.
Under this theory, the S&P 500 rises an average of 14.6 percent when the NFC team wins. This figure is exactly double the average gain of 7.3 percent when the AFC team wins.
The following are times it was correct (within reason) this century:
2012: Giants (NFC) won, S&P rose 13.41 percent
2010: Saints (NFC) won, S&P rose 12.78 percent
2007: Colts (AFC) won, S&P rose 3.53 percent
2005: Patriots (AFC) won, S&P rose three percent
2004: Patriots (AFC) won, S&P rose 8.99 percent
2003: Buccaneers (NFC) won, S&P rose 26.38 percent
2002: Patriots (AFC) won, S&P declined 23.37 percent
2001: Ravens (AFC) won, S&P declined 13.04 percent
From the perspective of an NFC win resulting in S&P success and an AFC win resulting in S&P woes, eight of the 13 years this century have been in favor of this theory. That's about a 62 percent success rate.
Interestingly, the theory appears to work rather well by decade. For instance, in the 1980s, the average S&P return was 13.21 percent. The NFC won seven of the ten Super Bowls that decade.
Similarly, in the 1990s, the S&P averaged 16.13 percent. The NFC won eight Super Bowls in the 90s.
Then, in the 2000s, the S&P averaged -0.61 percent. Sure enough, the AFC won out that decade, finishing with seven Super Bowl victories.
This decade, however, appears to buck the trend. From 2010 through 2012, the S&P averaged 8.73 percent - leaning closer to the 7.3 percent average when the AFC wins the Super Bowl. Yet, the NFC has won three of the four Super Bowls played thus far, with Baltimore taking the first AFC win on Sunday.
However, the S&P is up around 6.1 percent thus far in 2013, giving the appearance the AFC win this year could prove an accurate predictor.
It's anybody's guess why this theory has proven somewhat accurate, but the answer may lie in the popularity of the teams. According to ESPN's rankings of the 32 NFL teams by popularity, 11 of the top 16 are in the NFC. Meanwhile, 11 of the bottom 16 are in the AFC.
Perhaps fans work harder when their team wins the big game and, when popular teams win, so does the economy. If that's true, investors should be careful - the Ravens are less popular than any team that has won in the past decade.
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