Could the Super Bowl Batter or Burnish Your 401(k)?

Will your 401(k) be bumped up by a Buccaneers victory—or chipped by the Chiefs?

That’s what adherents of the so-called Super Bowl Theory would likely conclude, after all. The theory is that when a team from the old National Football League wins the Super Bowl, the S&P 500 will rise, and when a team from the old American Football League prevails, stock prices will fall.

It’s a “theory” that has been found to be correct nearly 80% of the time—for 40 of the 54 Super Bowls, in fact. 

Not that it hasn’t had its shortcomings. One need look back no further than last year’s win by the AFC’s Kansas City Chiefs (yes, these Kansas City Chiefs) over the NFC Champion San Francisco 49ers to refute the applicability (or did your 401(k) miss that 18.4% rise in the S&P 500?). Or how about the year before that when the AFC’s New England Patriots (who once were the AFL’s Boston Patriots) bested the NFC champion Los Angeles Rams (the S&P 500 was up more than 30% in 2019).

Or, looking the other way, the year before that a win by the NFC champion Philadelphia Eagles against the AFC Champion Patriots turned out to be a loser, marketwise, with the S&P 500 down more than 6% (though for most of the year it was quite a different story). Ditto the year before when the epic comeback by those same AFC Champion Patriots against the then-NFC champion Atlanta Falcons failed to forestall a 2017 market surge. 

Now, one might think that the real “spoiler” to this market “theory” is the New England Patriots—but the year before that, the AFC’s (and original AFL) Broncos’ 24-10 victory over the Carolina Panthers, who represented the NFC, also proved to be an “exception.”

Market Makings

You might well wonder why, in view of that consistent string of “exceptions” that we’re still talking about this “theory”—but, as it turns out, that’s been an unusual (albeit consistent) break in the streak that was sustained in 2015 following Super Bowl XLIX, when the AFC’s New England Patriots (yes, they show up a lot) bested the Seattle Seahawks 28-24 to earn their fourth Super Bowl title. It also “worked” in 2014, when the Seahawks bumped off the legacy AFL Denver Broncos, and in 2013, when a dramatic fourth-quarter comeback rescued a victory by the Baltimore Ravens– who, though representing the AFC, are technically a legacy NFL team via their Cleveland Browns roots (yes, they moved to Baltimore in 1995—though the NFL still views them as an expansion team—filling the hole left by the Colts’ 1984 “dead of night” move to Indianapolis. The Browns, sadly, are still waiting for a Super Bowl trip[i]). 

Admittedly, the fact that the markets fared well in 2013 was hardly a true test of the Super Bowl Theory since, as it turned out, both teams in Super Bowl XLVII—the Ravens and the San Francisco 49ers—were NFL legacy teams.

However, consider that in 2012 a team from the old NFL (the New York Giants) took on—and took down—one from the old AFL (the New England Patriots—yes, those New England Patriots). And, in fact, 2012 was a pretty good year for stocks.

Steel ‘Curtains’?

On the other hand, the year before that, the Pittsburgh Steelers (representing the American Football Conference) took on the National Football Conference’s Green Bay Packers—two teams that had some of the oldest, deepest and, yes, most “storied” NFL roots, with the Steelers formed in 1933 (as the Pittsburgh Pirates) and the Packers founded in 1919. According to the Super Bowl Theory, 2011 should have been a good year for stocks (because, regardless of who won, a legacy NFL team would prevail). 

But as some may recall, while the Dow gained ground for the year, the S&P 500 was, well, flat.

And then there was the string of Super Bowls where the contests were all between legacy NFL teams (thus, no matter who won, the markets should have risen):

• 2006, when the Steelers bested the Seattle Seahawks;
• 2007, when the Indianapolis Colts (those old Baltimore Colts) beat the Chicago Bears 29-17;
• 2009, when the Pittsburgh Steelers took on the Arizona Cardinals (who had once been the NFL’s St. Louis Cardinals); and
• 2010, when the New Orleans Saints bested the Indianapolis Colts, who, as we’ve already noted, had roots dating back to the NFL legacy Baltimore Colts.

Sure enough, the markets were higher in each of those years.

As for 2008? Well, that was the year that the NFC’s New York Giants upended the hopes of the AFL-legacy Patriots (yes, those Patriots) for a perfect season, but it didn’t do any favors for the stock market. In fact, that was the last time that the Super Bowl Theory didn’t “work” (well, until this past year—oh, and the year before that—and the year before…).

Patriot Gains

Times were better for Patriots fans in 2005, when they bested the NFC’s Philadelphia Eagles 24-21. Indeed, according to the Super Bowl Theory, the markets should have been down that year—but the S&P 500 rose 2.55%.

Of course, Super Bowl Theory proponents would tell you that the 2002 win by the New England Patriots accurately foretold the continuation of the bear market into a third year (at the time, the first accurate result in five years). But the Patriots’ 2004 Super Bowl win against the Carolina Panthers (the one that probably nobody except Patriots fans and disappointed Panthers advocates remember because it was overshadowed by Janet Jackson’s infamous “wardrobe malfunction”) failed to anticipate a fall rally that helped push the S&P 500 to a near 9% gain that year, sacking the indicator for another loss (couldn’t resist).

Bronco ‘Busters’

Consider also that despite victories by the AFL-legacy Denver Broncos in 1998 and 1999, the S&P 500 continued its winning ways, while victories by the NFL-legacy St. Louis (by way of Los Angeles) Rams (that have since returned to the City of Angels) and the Baltimore Ravens (those former “Browns”) did nothing to dispel the bear markets of 2000 and 2001, respectively.

In fact, the Super Bowl Theory “worked” 28 times between 1967 and 1997, then went 0-4 between 1998 and 2001, only to get back on track from 2002 on (though “purists” still dispute how to interpret Tampa Bay’s 2003 victory, since the Buccaneers spent their first NFL season in the AFC before moving to the NFC). 

Indeed, the Buccaneers’ move to the NFC was part of a swap with the Seattle Seahawks, who did, in fact, enter the NFL as an NFC team in 1976 but shuttled quickly over to the AFC (where they remained through 2001) before returning to the NFC.[ii] And, not having entered the league until 1976, regardless of when they began, can the Seahawks truly be considered a “legacy” NFL squad? 

Bear in mind as well, that in 2006, when the Seahawks made their first Super Bowl appearance—and lost—the S&P 500 gained nearly 16%.

As for Sunday’s contest, the Buccaneers have been here before—but while it’s been a while for the team, QB Tom Brady certainly knows his way around a Super Bowl (playing in nine of them—and with this one, regardless of outcome, he’ll be the oldest player to suit up for that game)—and they’re not only the home team, they’re actually the first home team in Super Bowl history to actually play in their home stadium. Just to confuse matters a bit, they have exercised their prerogative as the home team to choose their jersey—and they have elected to wear their white “away” jerseys (and pewter pants). That happens to be the jersey they have won throughout the playoffs, having played all of their games to this point “on the road”—the first wild card team to make it to the Super Bowl since the 2010-11 Green Bay Packers. 

The Chiefs have been here before as well—as recently as a year ago (though before that, not since Super Bowl IV), and they’ll be wearing the same red “home” jerseys (and white pants) they wore in Super Bowl 54. In case you’re wondering why that matters, dating back to 2005 with the Patriots in Super Bowl XXXIX, the team wearing white jerseys has won 12 times. Though not last year, of course.

All in all, it looks like it should be a good game. 

And that—whether you are a proponent of the Super Bowl Theory or not—would be one in which regardless of which team wins, we all do!

- Nevin E. Adams, JD

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[i] Four current NFL teams have never appeared in a Super Bowl, including franchises that have relocated or been renamed: the Cleveland Browns, Detroit Lions, Jacksonville Jaguars, and Houston Texans, though both the Browns (1950, 1954, 1955, 1964) and Lions (1935, 1952, 1953, 1957) had won NFL Championship Games prior to the advent of the Super Bowl.

[ii] Note: Seattle is the only team to have played in both the AFC and NFC Championship games, having relocated from the AFC to the NFC during league realignment prior to the 2002 season. The Seahawks are the only NFL team to switch conferences twice in the post-merger era. The franchise began play in 1976 in the NFC West division but switched conferences with the Buccaneers after one season and joined the AFC West.

Groundhog "Ways"

February 2 is the day upon which America turns its attention to Punxsutawney, PA (and what seems to be a rapidly expanding array of Punxsutawney Phil wannabes) to get a read on the duration of winter.

The theory, of course, is that if your local groundhog sees his (or her?) shadow when he/she emerges from his/her burrow, it will send him/her scurrying back inside, and with that action foretell six more weeks of winter, whereas no shadow portends a timely/early spring. However, like weather forecasters everywhere, Phil is often wrong in his predictions. Indeed, by some estimates (and going back to 1887) he’s only been right… 39% of the time (and since 1969, only about 36%[i]).

As complicated as it surely must be to accurately predict the end of winter, that at least is an event in the relatively near term. And one that (for Punxsutawney Prognostication, anyway) requires only the emergence from one’s burrow. Predicting retirement outcomes… well, that’s a whole other thing. 

Surveys routinely show that most Americans have not even tried to guess how much money they will need to live on in retirement, much less actually made an educated guess. In fact, according to the Employee Benefit Research Institute/Greenwald & Associates’ 2020 Retirement Confidence Survey, just over 4 in 10 (44%) have (ever) estimated how much income they and your spouses would need each month in retirement. That’s a pretty consistent finding from the RCS, which began asking that question way back in 1993.

Worse—and this data point was not in the 2020 RCS—when you ask how people had made some kind of assessment of their retirement income needs, a jaw-droppingly large percentage indicated they… guessed.

Guessing might well be deemed a superior approach than ignoring the matter altogether, but consider that heading toward “retirement”[ii] with no idea of how much you might need is a bit like going on a long trip in an unfamiliar vehicle with a fuel gauge that isn’t working—oh, and with no real certainty as to exactly where you’re going, or when you need to get there. 

Many allow themselves the luxury of postponing this focus for another day—ignoring two harsh realities. The first is that time is (literally) money—the longer it’s put off, the steeper the financial “hole” to fill. Second—and one that ignores several harsh realities of its own—thinking that date of “retirement” will be of our choosing.[iii] If nothing else, the events of the past year should serve as a fresh reminder of that point (see also 6 Things People Get Wrong About Retirement).

Several years back, the RCS asked individuals how much they need to save each year from now until they retire so they can live comfortably in retirement. One out of five put that figure at between 20% and 29%, and nearly one-quarter (23%) cited a target of 30% or more. Those targets are larger than one might expect, and larger than the actual savings reported by RCS respondents would indicate.[iv]

All of which brings to mind this question: Were the savings projections so high because so many workers didn’t do a savings needs calculation—or did participants avoid doing a savings needs calculation because they thought the results would be too high?

Or both?

Let’s face it, if you’ve never tried to figure out how much you’ll need to live in retirement, you may not live very comfortably in retirement. 

And you don’t need to consult a Pennsylvania groundhog to know that could make for a really long retirement “winter.” 

- Nevin E. Adams, JD

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[i] Which still seems to put him ahead of most local weather forecasts.

[ii] And we are all, one way or another, even if you want to just think of it as a time post-employment.

[iii] Fewer than half of the retiree respondents to the RCS retired “about when” they had planned, and only 6% later than planned. Roughly half—and this has been true through the long life of the RCS—retired earlier than expected.  

[iv] And considerably larger than the record high savings numbers reported in the Plan Sponsor Council of America’s Annual Survey.