Dow Jones Hikes For Past Year

January 9, 2004
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GRAND RAPIDS — If you’re thinking of reallocating your assets in your 401(k) plan, you might want to hold off on until Feb. 2.

By then you should have a clearer picture of where the Dow Jones industrial average is headed because the Super Bowl will be over. The 38th “game of games” will take place on Feb. 1, and if a former American Football League team plays in it and loses, then the Dow should rise this year.

If an old AFL franchise wins, though, you might want to buy bonds, or put your money in CDs, or maybe even in a mattress.

The Super Bowl has correctly predicted the stock market’s performance 26 out of 30 times when the game has featured an old AFL team, even though none are nicknamed the Bears or Bulls. That means the game has been an accurate prophet of the Dow’s direction nearly 87 percent of the time. Even a meteorologist with dual Doppler can’t come close to that track record and it’s unlikely that your broker can match it, either.

And the trend held true for 2003, as the Dow rose by 20.2 percent for the year. It was a year that saw National Football League MVP Rich Gannon throw five interceptions for his Oakland Raiders, as the former AFL franchise was hammered by Tampa Bay last Jan. 26.

There were 10 teams in the old AFL when the league merged with the NFL in 1970, and those 10 franchises have played in 30 of the 37 Super Bowls. Of those 30 games, AFL teams have won 10 and lost 20.

In the 10 years the AFL teams won, the Dow dropped seven times for a pretty decent 70 percent prediction success rate. Of the 20 Super Bowls AFL teams lost, the Dow rose in 18 of those years for an even better 90 percent success rate.

The five biggest Dow Jones winners last year were Intel, Caterpillar, Alcoa, United Technologies and McDonald’s. Michigan firms scored pretty well, too.

A recent CNBC trader poll revealed that 70 percent of the 130 traders the cable channel surveyed felt the Dow would rise in 2004. Most projected a climb between 8 percent and 10 percent; 17 percent said the Dow would top 12,000 by year’s end.

Of course, those predictions could change by halftime.           

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