The Super Bowl Rule: Would a win for the Rams or Bengals be better for the US stock market?

“The Los Angeles Rams are four-point favourites with the bookies to beat the Cincinnati Bengals in the fifty-sixth Super Bowl that takes place on Sunday and investors just might be rooting for the Stan Kroenke-owned team as firmly as its fans,” says AJ Bell Investment Director Russ Mould. “The Rams are bidding to become to the second team in a row, after Tampa Bay last year, to win the NFL Championship in their own stadium, while holders of US stocks will be looking toward the old ‘Super Bowl Rule’ and crossing their fingers.

“As a result of the merger between two rival leagues in the 1960s, the National Football League is split into two conferences, National (NFC) and American (AFC), whose winners meet in the Super Bowl to decide the overall champion.

“The US stock market, as benchmarked by the S&P 500 index, has, on average, performed better in years when the team from the NFC has won and less well when the team from the AFC has claimed the Super Bowl and the players have won their championship rings.

“The Rams hail from the NFC and Cincinnati from the AFC.

Source: NFL, Refinitiv data. First Super Bowl played in January 1967. Average returns based on calendar year of each game.

“This effect has become a little less pronounced over time, but it is noticeable nonetheless, so investors who own US shares will be hoping that the Rams franchise can improve upon a record of one win and three losses in the big game, especially as that one triumph came when the franchise was based in St. Louis and their two prior appearances when based in Los Angeles both ended in defeat. Cincinnati has never won a Super Bowl and can only point to a pair of narrow defeats against the Joe Montana-led San Francisco 49ers back in the 1980s.

Source: NFL, Refinitiv data. First Super Bowl played in January 1967. Average returns based on calendar year of each game.

“After the early dominance of the National Football League’s (now NFC’s) Green Bay Packers, the 1970s saw the AFC’s Miami Dolphins, Pittsburgh Steelers and Oakland Raiders rule the roost, with only the NFC’s Dallas Cowboys getting in the way. Yet from an economic perspective, those teams ruled the field after an oil price shock, galloping inflation and soaring interest rates made the 1970s difficult years for investors.

“Come the 1980s, the Paul Volcker-led Federal Reserve had begun to tame inflation and cut interest rates, while Reaganomics were helping to drag America out of its post-Vietnam funk. As it happened, the NFC dominated that decade, as Washington, San Francisco and the York Giants bagged multiple Vince Lombardi Trophies.

“Dallas and Green Bay established fresh dynasties in the 1990s, when benign inflation, low interest rates, globalisation, the Greenspan put and the rise of technology stocks gave US equities a further boost – although the AFC got its slice of the action as the Denver Broncos, under quarterback John Elway, ended a rotten run of three Super Bowl defeats to win back-to-back titles as the technology bubble inflated in 1998 and 1999.

“AFC teams, in the form of the Baltimore Ravens and the New England Patriots (for Tom Brady’s first win out of a record seven), then copped the downdraft as the bubble burst and the S&P 500 plunged in 2001 and 2002, although it was the NFC’s New York Giants who were kings of the NFL hill when the Great Financial Crisis struck in 2008. 

“Since then, the Patriots, Broncos and Steelers have returned to the summit, giving the AFC a chance to shine as US equities have forged a long bull run and close up the historic stock market performance gap between the two conferences – but that gap is still large enough to keep watchers of the Super Bowl rule, as well as sports fans, interested.”

Source: NFL, Refinitiv data. *Packers’ wins as part of the pre-1967 National Football League classified as National Football Conference (NFC). **Jets’ and Chiefs’ wins as part of the pre-1967 American Football League (AFL) classified as American Football Conference (AFC).