The could end up proving to be a costly one for stock investors.
Back in 1970s, Wall Street analyst Robert H. Stovall noticed that whenever an original American Football League team, like the Denver Broncos, won the championship, stock returns were negative for the year.
Up years followed a win by an original National Football League team. The pattern also held up with teams that joined the respective conferences after the 1966 merger between the two leagues.
Coincidence? Superstition? There is no reason why who wins the Vince Lombardi trophy should have any weight whatsoever on how stocks perform, something Stovall acknowledges.
“Even a blind squirrel occasionally finds a nut,” said David Moenning, chief investment officer at Sowell Management Services in Evergreen.
But the measure, as whacky as it is, has predicted the market’s direction correctly 40 out of 49 times for an 82 percent accuracy rating, according to The Wall Street Journal.
The past seven years, it has been spot on. The Denver Broncos, now part of the American Football Conference, however, have been associated with three significant misses the measure has had over the years.
When the San Francisco 49ers, a National Football Conference team, handed Denver a 55-10 loss in 1990, the Standard & Poor’s 500 fell 6.6 percent instead of ending the year with a gain.
Two even bigger miscues came in 1998 and 1999, when, despite back-to-back Super Bowl wins by the Denver Broncos, U.S. stock markets went onto some of their strongest gains ever.
Denver beat Green Bay 31-24 in 1998, and the market ripped out a 26.7 percent return. The following year, Denver handed it to Atlanta 34-19, and the S&P 500 rose 19.5 percent.
Credit dot-com mania for being a stronger force than John Elway’s arm.
This year it is looking more likely stock markets will line up with what the Super Bowl predictor says should happen given the Broncos performance on Sunday.
Like the Carolina Panthers, the markets got behind early this year and investors have found themselves reeling from a nearly unrelenting attack. Investors will be hard pressed to escape the pocket collapsing around them.
Moenning hopes that stock indexes will confound the indicator like they did in 1998 and 1999.
As of Monday, the S&P 500 was down 9.3 percent for the year, the Dow Jones industrial average was down 8 percent, and the Nasdaq down 14.45 percent.
The DJIA dropped more than 400 points Monday before recovering to end the day down 177.9 point or 1.1 percent.
Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or @aldosvaldi
