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February 1, 2013
Broncos vs. Seahawks 

What does Football tell us about the Street?

    

While everyone has their own reasons for how they pick their team - and everyone has their own superstitions about what would happen if their team wins or loses - we wanted to see if the results of the Big Game could tell us anything about Wall Street or overall M&A performance until the next Big Game.

 

The chart below demonstrates both market performance (as measured by the NASDAQ, the Dow, and the S&P 500) and US IT M&A deal volume during the last ten years. We found that despite a roughly even win/loss ratio (the AFC claimed the Vince Lombardi trophy six times to the NFC's four), years marked by AFC victories enjoyed on average higher annual returns in all three indices. 

 

Of course, it doesn't help the NFC that their winning period began in 2008.

 

Another way to slice it is to look at transaction volume in the US IT Industry. Using this metric, the NFC squeaks ahead with an average of 2024 completed deals each year compared to the AFC's 1917.

 

But perhaps we're not going back far enough. 

 

Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, looked back at 47 years of data and applied the "Super Bowl Predictor Theory": that the market will gain for the year if an NFC team (or an AFC team with an NFC origin) wins the game. This metric has been correct 37 of the 47 years on a total return basis.

 

With the Broncos slight favorites to take it away, we'll see if previous trends hold true. 

 

But as we know from the last year in the IT Services industry, surprises happen all the time.

 

Enjoy the game!

For a closer look at the data behind this chart, click here.

About martinwolf    

 

                
             San Francisco, CA                                                Bangalore, India

With offices in San Francisco and Bangalore, India, martinwolf is a leading middle market M&A Advisory focused on companies with services-based business models. Since 1997, our team has completed more than 115 transactions in nine countries. We are a five-year member of the Merrill Lynch PS Referral Network, and were selected as ICICI Bank's (India's leading private bank) exclusive strategic partner for acquiring U.S. IT companies.    

 

The firm is also a presenting sponsor of the Global IT M&A Forum.   

 

martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.  

 

To learn more about martinwolf, contact Matthew Putzulu at mputzulu@martinwolf.com.

 

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"If Seattle wins the theory says that the S&P 500 will be up this year; if Denver wins the market closes down (it's off 0.52% YTD)." 

 

Howard Silverblatt, S&P Dow Jones

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