With the college football national championship up for grabs, the Alabama Crimson Tide is a heavy favorite, while Notre Dame is hoping to pull its own Rudy-like moment tonight at the Orange Bowl down in Florida. Forget about bragging rights, though, the big question is, who does the market want?
Based solely on their nicknames, the green of the Fighting Irish seems like a natural fit for the bulls, while one couldn't think of a better mascot for the bears than Alabama's Crimson Tide. That sounds all well and good, but how did equities perform following prior seasons when each team won (or claimed) college football's national championship? With help from an article by Andy Staples at Sports Illustrated, we looked back to see how the DJIA performed in the year after prior seasons when either Alabama or Notre Dame won or claimed the championship of college football.
Going back to 1924, Alabama has claimed title to 14 national championships including titles in two out of the last three years. In the year after Alabama's prior titles, the DJIA has averaged a gain of 1.95% with positive returns 71.4% of the time. Furthermore, in the year after Alabama's last five national championships, the DJIA has been anything but "Crimson," with positive returns every year and an average gain of 10.23%.
For Notre Dame, equty market performance in the year after they were crowned college football champions has not been as lucky. Following Notre Dame's eleven prior championships, the DJIA has averaged a decline of 1.38% with positive returns just over half of the time (54.5%). Interestingly, there have also been two seasons (1930 & 1973) where both Notre Dame and Alabama have claimed title to the National Championship. Following each of those seasons, the DJIA saw declines of 52.7% and 27.6%, respectively. Fortunately with the BCS, there are no more controversies over who is the national champion. Oh wait...
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