Why You (and Your Portfolio) Should Root for the Pittsburgh Steelers

Last Updated Jan 31, 2011 11:27 AM EST

I'll be watching the big game on Sunday not to root for my favorite team or watch the half-time show or Super Bowl commercials, but to see how the market will perform for the year.

There's a theory that each year Pittsburgh celebrates a championship, the S&P 500 Index provides at least a 15 percent return. At least, that's what the data shows:
  • January 12, 1975 -- Pittsburgh knocked off the Minnesota Vikings. The S&P 500 returned 37.2 percent that year.
  • January 18, 1976 -- Pittsburgh defeats the Dallas Cowboys. The S&P 500 returned 23.9 percent.
  • January 21, 1979 -- The Steelers beat Dallas again. The S&P 500 returned 18.4 percent.
  • January 20, 1980 -- Pittsburgh beats the Los Angeles Rams. The S&P 500 returned 32.4 percent.
  • February 5, 2006 -- The Steelers upend the Seattle Seahawks. The S&P 500 returned 15.8 percent.
  • February 1, 2009 -- Pittsburgh defeats the Arizona Cardinals. The S&P 500 returned 26.5 percent.
On the other hand, having Pittsburgh simply make the Super Bowl may be enough for the stock market. The Steelers have only lost one Super Bowl (1996) and interestingly, the S&P 500 index produced a 23.0 percent return. So the theory should be changed to expecting great returns anytime the Steelers make it to the Super Bowl, regardless of the outcome.

Obviously, football has no real impact on stock market returns, and the predictive ability of the Steelers playing in the Super Bowl is just coincidence. In fact, most stock market predictions have no persistent ability to predict future performance. And yet we continue to try to find something that will give us an edge in our portfolios, many of which have no real cause and effect relationship with the stock markets.

For example, a recent study found that the general mood of people on Twitter could predict the outcome of the stock market with 87.6 percent accuracy. And a colleague of mine recently reminded me of the study which found that the production of butter in Bangladesh was also highly correlated with stock market returns. Or don't forget Lusha, the circus chimpanzee whose portfolio outperformed most of Russia's mutual funds. What are some of your favorite predictors?

It will be fun to watch the outcome of the game and how the 2011 equity market shapes up, but I'll continue investing according to my well-designed plan that considers my ability, willingness and need to take risk. And not who wins the coin toss.

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    Larry Swedroe is director of research for The BAM Alliance. He has authored or co-authored 13 books, including his most recent, Think, Act, and Invest Like Warren Buffett. His opinions and comments expressed on this site are his own and may not accurately reflect those of the firm.

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