The Super Bowl Stock Market Predictor The Super Bowl Stock Market Predictor holds that if a team from the old NFL wins, the market will rise in that year; if a team from the old AFL wins, the market will fall. In 1990 two researchers found that the predictor was accurate 91 percent of the time. A member of Washington and Lee University's finance faculty, George Kester, has completed a new study that finds that the predictor's accuracy has fallen slightly to 77 percent. He speaks with host Liane Hansen.

## The Super Bowl Stock Market Predictor

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The Super Bowl Stock Market Predictor

# The Super Bowl Stock Market Predictor

## The Super Bowl Stock Market Predictor

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The Super Bowl Stock Market Predictor holds that if a team from the old NFL wins, the market will rise in that year; if a team from the old AFL wins, the market will fall. In 1990 two researchers found that the predictor was accurate 91 percent of the time. A member of Washington and Lee University's finance faculty, George Kester, has completed a new study that finds that the predictor's accuracy has fallen slightly to 77 percent. He speaks with host Liane Hansen.

GEORGE KESTER: Thank you. It's a pleasure to be here.

HANSEN: It's a pleasure to have you. and here's a hypothetical question for you. If over the past 20 years I invested when an old NFL team won and got out of the market if they lost, would I be rich or poor today?

KESTER: Well, I've got data for the last 42 years...

HANSEN: Oh.

KESTER: Now, as a point of comparison: Had you invested the same thousand dollars in the S&P 500 and simply held it there for the entire 42-year period, then your wealth would only be \$43,000, roughly.

HANSEN: Wow.

KESTER: And so your wealth would be almost two and half times as great had you invested solely on the outcome of the Super Bowl.

HANSEN: Truly? So the predictor has proven to be accurate.

KESTER: Absolutely.

HANSEN: But couldn't it just be coincidence?

KESTER: Yeah. And in truth it is. It's simply spurious correlation, but it's a lot of fun to look at and talk about.

HANSEN: Sure. Well, how have you updated the predictor?

KESTER: Well, there was an article by Tom Kruger and Bill Kennedy in the top academic journal of my field, which was the Journal of Finance, and they looked at the first 20 years of the predictor and reported that its accuracy was 91 percent.

HANSEN: Wow.

KESTER: Which was amazing. And in my update, over the entire 43 years including 2009, it's been accurate 79 percent of the time.

HANSEN: Okay, but that's...

KESTER: So the accuracy has fallen. But still, the investment performance is still something to take notice of.

HANSEN: Okay, so now we have the Colts. They represent the AFC but they were the old NFL's Baltimore Colts...

KESTER: Correct.

HANSEN: ...prior to the merger.

KESTER: Correct.

HANSEN: And the Saints came into the NFL in 1967. So basically, two teams from the old NFL are playing in the Super Bowl.

KESTER: Right.

HANSEN: What's an investor to do?

KESTER: An investor can be confident that regardless of who wins, the market is going to be up next year.

HANSEN: And you can say that with certainty?

(SOUNDBITE OF LAUGHTER)

KESTER: Well, you know, the record of the Super Bowl Stock Market Predictor speaks for itself.

HANSEN: Do you do this?

(SOUNDBITE OF LAUGHTER)

KESTER: No, I wish I had, though.

(SOUNDBITE OF LAUGHTER)

HANSEN: George Kester is on the finance faculty at Washington and Lee University. His study of the Super Bowl Stock Market Predictor will be published in the spring issue of the Journal of Investing. Thank you very much.

KESTER: You're welcome.