A Super Bowl Indicator for Bankruptcy Filings?

Stock market pundits annually get a lot of fun out of the so-called Super Bowl indicator, which purports to forecast the direction of the markets by checking out the identity of the pigskin titleholder. Under a commonly used version of the indicator, whenever a team which was with the National Football League prior to its 1970 merger with the upstart American Football League wins the Super Bowl, the stock markets will rise for the year; if a team with AFL or AFC roots wins, look out below.

Although this is obviously a silly, spurious, and superstitious exercise, those who follow such things claim a 79% accuracy rate, or in other words, 34 correct calls from the 43 prior Super Bowls.

This years game automatically forecasts mad money for market participants, as both the Saints and the Colts have NFL roots. This is despite the Dow Jones, Nasdaq, etc., being seriously down for the month of January. In the 1970’s the indicator was hitting at a red-hot 90% rate, but since then interest in it has cooled off a bit, as the results inevitably regress toward the mean, franchise shifts make tracking who’s who more difficult, and as the game itself has been pushed back from mid-January to February, well after most interest in New Years prognostications has faded.

Still, it got me to thinking — could I devise a Super Bowl indicator that would predict the ebb and flow of bankruptcy filings in the greater Lawrence area instead of the market? Looking at 2004, one of the all-time peaks for bankruptcy, as consumers raced to file their cases before new laws took effect, finds that the New England Patriots (charter members of the American Football League) lifted the Vince Lombardi trophy that winter.

So does an AFL/AFC triumph mean bankruptcies will be on the rise in the Merrimack Valley? Probably not — 2005 had unusually low filing rates, because most interested people had already filed the year before. And the football champion that year? Well, the Patriots again, who downed the NFC based Philadelphia Eagles in Jacksonville.

I guess it only works for the stock market after all.

 

By Doug Beaton

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