Analytic Investors’ patented contrarian return-on-investment Super Bowl model missed only once, when the Giants beat the Patriots—and not the time you’re thinking of. Its analysis is telling it that Peyton Manning and the Broncos are a sure thing to win by at least a field goal, good enough to cover the point spread and make you as much money as you are willing to wager.
This year’s Super Bowl matchup features the lower-alpha Denver Broncos (4.6%) against the higher-alpha Seattle Seahawks (13.7%). As noted previously, we have found evidence that lower-alpha teams in the regular season tend to be undervalued throughout the post- season. Thus, as current 2-point favorites, we think Peyton Manning & Co. will overcome Richard Sherman’s arrogance to win this one by at least a field goal.
You might want to take those winnings and short a few indices with them, because of the tried-and-sometimes-true “NFC Super Bowl champion equals good year for stocks” indicator. On the other hand, the “Broncos winning the Super Bowl is good for the market” indicator might lead you to do otherwise.
Mr. Parets says this year’s indicator is a “lose-lose” for the market, as neither team, the Broncos and Seahawks, traces its roots back to the old original NFL. But there is some hope, he added: while the indicator has an 85% “success” rate, the Broncos have for whatever reason been among the small group of championship teams that have “produced” rising stock markets in the years they won the title, even though they are an old AFL team.
NFL Alphas 2013-2014 [Analytic Investors]
This Hedge Fund Thinks It Knows The Result Of The Super Bowl [BI]
The Super Bowl and the Market: A ‘Lose-Lose’ Indicator This Year [WSJ MoneyBeat blog]