It is the start of football season. If you are a fan like me, Sundays on the couch with my son and a bowl of chips is just about heaven,.. even if you’re a Detroit Lions fan. This is my rookie year in a Fantasy Football. My league is called TDs and Beers. Not my call. Eight teams, two divisions, sixteen games, and a lot of cyber trash talk.
Immediately prior to our live draft starting, while trash talking about giving my toddler a bath, I couldn’t help noticing the similarities of Fantasy Football and Stock Picking. Allow me to expound.
1. There are rookies and there are veterans.
Obviously I’m a rookie to fantasy football. Picking from my heart and less from my head, I picked 3 Detroit Lions on my team. Conversely, my best friend Joe, who is in over 12 different leagues (8 that his wife knows about), knew everything about every team. He knew the bye weeks, the starters and backups for the Jacksonville Jaguars. Joe had drafting strategies depending on the order that the computer picked him to draft. Wide receiver, wide receiver, running back, quarter back, etc.
Similarly, when investing, you have experts and rookies and strategies based on where you are in your life. You have technical analysis, fundamental analysis, top down analysis, bottom up analysis, sector funds, asset classes, international, domestic, and even socially responsible funds. Maybe football should have a socially responsible team?
2. There are sure bets, and risky bets.
Adrian Petersen is supposed to be the cream of the crop. He led the league last year in rushing yards. If you’re not a football fan that means he’s a good runner. The best pic. “He had one game with over 57 points last year” Joe explains as we talk football over dinner. Adrian Petersen is a sure bet.
In the stock world we also have what some consider sure bets. This reminds me of the Cisco Kid back in the heyday of the internet bubble. Cisco Systems could do no wrong. They were making 100% every day, or so it seemed! Cisco was a sure bet.
But just like Cisco not being a sure bet after the internet bubble burst, in Fantasy Football there are sure bets that burst. In 2008, Tom Brady, quarterback for the New England Patriots, and 3 time Superbowl champion, went down in the first game with a season ending knee injury. That was one sure bet that crashed and burned. This reminds me of another rule with stocks: Past performance is not indicative of future performance. There are no guarantees when investing in FANTASY FOOTBALLS PLAYERS or THE STOCK MARKET.
3. There is plenty of noise.
No matter where you turn you always have plenty of opinions of who is the best fantasy football picks. MLive, my Lions football watering hole, posts a top 5 fantasy picks weekly it seems. ESPN has internet galaxies devoted to finding the almighty greek gods football champions, complete with up-to-date, play by play, minute to minute stats on ALL the players. We know when Ocho Cinco tweets while catching a ball with one hand and a shoe only half laced up. Seriously, can you get enough sensationalism?
This is exactly like watching Jim Cramer on CNBC. They guy is a entertainer if I’ve every seen one. Jim says buy and millions of investors jump. This is what Carl at the Behavior Gap calls financial pornography coming out our ears. Unfortunately, everybody is a fantasy football expert much like Jim Cramer is an investing guru. (Insert sarcasm here.) So it is hard to tell which source is reliable, and which source is less than reliable. I haven’t found anywhere too reliable in fantasy football.
But investing does have something that fantasy football doesn’t have: Index Funds. Investing in an index fund would be much like picking the whole National Football League as your fantasy team. You may not win the big one with a concentrated holding of the best quarterback, runners and wide receivers, but you are guaranteed to have those top players within your overall portfolio. Just a little something to think about the next time you are playing fantasy football or picking an investment. Go Detroit Lions
Rich Feight is a Fee-Only Certified Financial Planner and founder of IAM FInancial, LLC in Michigan. He is also the author of Thinking Beyond Numbers, the financial planning and investment blog that brings awareness to your financial habits so that you can make good decisions. You can learn more about Rich at IAM Financial, LLC.