MONEY

Offbeat indicator: Seahawks win would benefit stocks

Nancy Tengler
The Republic | azcentral.com
Seattle Seahawks fans cheer on their team at Super Bowl XLIX media day on Tuesday, Jan. 27, 2015, at US Airways Center in Phoenix.

My football team is not in the Super Bowl. So, I find myself — a native San Franciscan and adopted Arizonan — in the awkward position of rooting for the Seattle Seahawks.

For me, the game is now all about the Super Bowl Predictor and its impact on future stock market returns. Through 2014, the Super Bowl indicator has successfully predicted stock performance 81 percent of the time (according to 88-year-old expert Robert Stovall of National Investment Services, who has been tracking the results for decades).

This unlikely measure has accurately forecasted the annual performance of the stock market for 39 out of the 48 years it has been traced. A bullish result for stocks requires an NFC victory. And that means that Seattle must win for the market to turn in a positive year in 2015.

Consequently, I can and will look past my home-team loyalties to root for the Seahawks. (Sincere apologies to Seahawk fans for the lack of enthusiastic support and to Patriot lovers for my fervent hope New England gets trounced. It's strictly business.)

Whichever team wins though, we should examine the historical facts of long-term stock market returns before we throw in the towel on a potential Patriots victory or count on the odds of an upside bias of a Seattle win.

So far this year investors have expressed a persistent concern that stocks seem to have exhausted upside potential on the heels of a five-year bull market and decelerating earnings growth. The bears cite the higher-than-average, cyclically adjusted Schiller p/e as well as a market that has returned 198.5 percent since bottoming in March 9, 2009.

The Schiller p/e divides the current S&P 500 price by an average of the prior decade's corporate profits, and although the Schiller p/e comes in at 27x versus its historical average of 16.6x (since 1881), it has been there before. In 2004, the ratio was nearly the same as the recent ratio of 27x and the S&P 500 doubled by the end of 2014 (including dividends).

I'm not arguing that stocks will continue to rise in the short-term. They may. They may not. But, I am arguing that stocks will generate enviable returns over longer periods.

If the Seahawks soar to a second victory in as many years, then investors can breathe easy with the knowledge that 81 percent of the time an NFC win has signaled rising prices for stocks. But if the Patriots deflate investors' hopes and secure the title, 2015 just may be a year to selectively buy the shares of stocks we have been wanting to own at lower prices.

Nancy Tengler spent two decades as a professional investor. She is an author, financial-news commentator and university professor; her book, "The Women's Guide to Successful Investing," is out now. Reach her at nancy.tengler@cox.net.