NFL's biggest winner: Bulls, not bears

NEW YORK (CNNMoney.com) -- Chicago Bear fans are no doubt thrilled their team is heading to Super Bowl XLI in Miami, but it's stock market bulls who had the biggest win on Sunday.

While the Bears still have to beat the Indianapolis Colts to get their Super Bowl rings, the Super Bowl Stock Market Indicator says the bulls can start celebrating right now.

According to the indicator, which has a surprisingly accurate track record, a victory by an old NFL team means a gain for the Dow Jones industrial average in the following year. And when the Colts beat the New England Patriots in the AFC Championship game Sunday night, it assured that there would be two old NFL teams on the field in Miami. The Colts moved to the AFC when the NFL and AFL merged in 1970.

Of course, basing investment decisions on the outcome of Super Bowl XLI is about as smart as using jockeys to play on your offensive line in the NFL. But the indicator has had a pretty good track record in predicting the direction of the 30-share Dow since the Green Bay Packers won the first Super Bowl 40 years ago.

The indicator has been correct following 31 of the 40 Super Bowls, wrong five times and was inconclusive four times (but more on that later). Even counting the inconclusive readings, that's about a 78 percent success rate. Dropping the inconclusive years from the equation results lifts the success rate near 89 percent.

The indicator gets attention this time every year partly because there are so many football fans on Wall Street trading desks. Even Bob Stovall, who helped popularize the Super Bowl indicator in the 1970s when he served as investment policy director at Morgan Stanley predecessor Dean Witter Reynolds, admits there's not a lot of logic or validity behind it. He is now managing director and strategist at Wood Asset Management.

"It's been correct just under 80 percent of the time - I don't know of any other gaggle of gurus that has a record that good," Stovall said a few years back. "Of course, I certainly wouldn't put real money into the market based on the game. But it's nice to know if it's on your side."

But the indicator has had some trouble in recent years, after correctly predicting the market better than 90 percent of the time in the big game's first 31 years.

The Dow posted a gain after the New England Patriots beat the Carolina Panthers in 2004, and the indicator's had only two clean wins in the last nine games. In fact, two of the market's best years followed wins by the AFL-born Denver Broncos over old NFL teams in 1998 and 1999.

Assuming there's any validity to the indicator, (a big assumption, admittedly) part of the problem with it in recent years is that in five of the last seven Super Bowls, one of the teams either was formed after the 1970 NFL-AFL merger or changed its name in a post-merger relocation.

The indicator didn't work in four of those five years, with the NFL-born Pittsburgh Steelers' win over the post-merger Seattle Seahawks in last year's Super Bowl being the only success in those years.

But that caveat may not be as much of an issue this year.

The Bears facing the Colts marks the seventh time that two old NFL teams have faced off in the big game. The six previous times that's happened, the Dow has gone up every time, posting an average gain of 18 percent.

So while Chicago football fans might be strutting Monday, and Colts fans will be relieved after their come-from behind victory, maybe the market bulls should be doing the most celebrating.

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