Tomorrow evening, millions of people will tune in to watch the forty-eighth Super Bowl between the Seahawks and the Broncos. Some will do it because they are fans of one of the teams that are playing, many will do it to watch the commercials. But a few will tune in, or at least care about the outcome of the game for a very different reason. The stock market. In 1978, sports columnist Leonard Koppett jokingly published a piece claiming that whether a NFC or an AFC team won could predict a bullish or bearish respectively over the following year. Despite the intended satirical nature of Koppett’s column, the Super Bowl Indicator or SBI has correctly predicted the market 80% of the time since it was first published. So is this a legitimate predictor of the market? No. A rudimentary understanding of the principle that correlation does not imply causation would cause a person to dismiss this indicator swiftly. A possible explanation for the correlation of these events is the observer effect. The indicator becomes a self-fulfilling prophecy as people take the score seriously and react in accordance with it.
