The Super Bowl indicator worth betting on

Forget about the pseudoscience of the traditional Super Bowl indicator. My money is on the Super Bowl advertising indicator.

By InvestorPlace Feb 1, 2010 1:31PM

InvestorPlaceBy Jim Woods

 

I'm not one for astrology, Tarot cards or pseudoscience of any kind, especially when it comes to money. But this time of year, the financial press inevitably gives us a not-so-healthy dose of this kind of blather via something called the Super Bowl indicator.

 

The theory here is that one can predict the fate of the financial markets based on which team wins the Super Bowl. I know it sounds silly, but for the sake of argument, let's look at this theory a little closer -- and then let's look at how investors might profit from the advertising climate around the big game.

 

The Super Bowl indicator postulates that if a team from the original National Football League (now the NFC) wins, the market will be up that year. If a team from the old American Football League (now the AFC) wins, then the market will be lower. But what does a victory by one team -- or one league -- have to do with the stock market?

 

I say not a damn thing. But as it turns out, the Super Bowl indicator's accuracy rate is actually better than that of most Wall Street pundits. In fact, the indicator has actually correctly predicted the direction of the equity markets in 34 of the 43 Super Bowls. That's an accuracy rate of over 79%. 

 

This year, many Super Bowl indicator advocates are smiling, as both gridiron combatants the Indianapolis Colts and the New Orleans Saints are considered original National Football League teams. The AFC's Colts were originally the Baltimore Colts of the NCF, and the Saints have always been part of the conference. So for bullish Super Bowl indicator people, this is a case of "heads I win, tails you lose."

 

Of course, if the market ends lower in 2010, well, then I'll be writing a different story this time next year. 

 

If you want a better measure of how the economy and the stock market are faring, a great place to look is the advertising climate around the big game. So far, this year's Super Bowl is off to a very nice financial start. 

 

CBS Corporation (CBS), the network airing the Super Bowl this year, said it was already close to selling out all of its advertising slots for the big game. By contrast, 2009's Super Bowl network host, NBC, a division of General Electric (GE), was essentially scrambling to find advertisers to buy up the very expensive spots right about the same time last year.

 

I guess this should come as no surprise, as last year's Super Bowl took place while the country was firmly in the grip of the Great Recession. This year, the nation has largely broken free of the recession's grip, and one clear indication that this is the case is the renewed spending set for this year's game. I think this bodes well for both the economy, and for the stock market, in 2010.

 

This Super Bowl advertising indicator is by no means scientific, although it's much more reality-based than the traditional Super Bowl indicator. Yet when the cost of 30 seconds of commercial time is an estimated $2.5 million to $2.8 million, and when the nearly 30-35 total minutes of commercial airtime during the game are nearly sold out two weeks prior to the event, I think we can safely say that the economic climate is getting much better.

 

Interestingly, this year's Super Bowl commercials will feature a new group of advertisers, and an absence of some old faithfuls. FedEx (FDX), PepsiCo (PEP) and embattled General Motors all have said they will not be buying ad time during this year's game. 

 

However, videogame maker Electronic Arts (ERTS), consumer goods giant Unilever (UL) and cell phone maker Motorola (MOT) all have stepped up and placed first-time Super Bowl advertising bets on the big game. Other confirmed advertisers for this year's event are Anheuser-Busch InBev (BUD), Coca-Cola (KO), Disney (DIS), Honda (HMC) and E*Trade (ETFC).

 

If this year's Super Bowl ratings turn out to be very good -- and judging by the interest in this year's match-up among football buffs, they certainly should be -- the real corporate winners could turn out to be the companies with the most aggressive, and the most memorable, advertising spots. Click here for "5 First-String Super Bowl Stocks" that are doing well right now and could be doing even better after game day.

 

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