An Analysis of the Super Bowl Predictor and the World Cup Phenomenon
An Analysis of the Super Bowl Predictor and the World Cup Phenomenon
Due to their dependance on the present value of all their future cash flows, the value of stocks in a stock market are incredibly hard to predict. A speculator is an individual who makes an estimate of the future value of a stock based on the general knowledge of a company’s future plans and how likely they are going to be profitable. With that in mind, many believe that they can speculate how the stock market is going to perform based on the results of Super Bowl and the World Cup.
The “Super Bowl Predictor”, also referred to as “The Indicator” is believed to be a predicament of how the American stock market is going to perform based on the results of the Super Bowl with an accuracy of 82%. According to the Super Bowl Predictor, a win for an American Football Conference (AFC) division team indicates a decline, and a win for a National Football Conference (NFC) division team indicates an increase in the overall performance of the US stock market in the upcoming year.
Another theory has caused many speculators to believe that the results of the World Cup are a precise way of foreseeing a country's performance in the global stock market in comparison with its peers over the upcoming months. According to this hypothesis, the winning country’s team can expect its stocks to perform at a higher advantage in the global market. On the other hand, the stocks of the runner-up team have a tendency to decline in value in the stock market. The results are believed to be temporary since the positive and negative effects of this phenomenon are prone to return to their ordinary state after a few months.
Over the past years, the Super Bowl Predictor has had an accuracy rate of 82%. However, since the US stock market and the Super Bowl winning football league have no real correlation, it can be concluded that this phenomenon is just a coincidence and cannot be used as a method predicting the future well being of the US stock market. For example, in 2008, in spite of the NFC division winning the Super Bowl, the US stock market experienced one of its biggest downturns since the great depression.
A country's overall stock market wellbeing fluctuates due to the anticipation of its economic performance in the coming future. Therefore, assuming a country’s success in the World Cup increases their long-run economic well-being through higher tourism profits and world media coverage, it can be speculated that their stock prices will instantly reflect the expected future economic well-being, and will therefore increase in price.
The same is true about the World Cup phenomenon. Since the world stock market and the World Cup have no direct links, it can be concluded that the World Cup predicament method is just coincidence and lacks any factual evidence. In 2002, even though Brazil won the World Cup, their expected economic upturn was overshadowed by a deep recession. In addition, The United Kingdom does not seem to yield to the World Cup phenomenon since it’s economy tends to carry out the complete opposite of what the majority of speculators expect. England’s stock market tends to perform better when their country’s football team is not successful in the World Cup.