By Ross Heart
Sweltering heat giving way to cool crisp nights means the kids are heading back to school, but to many it also signals the start of the NFL season. For countless football fans that means being in a fantasy football league. If you have kids with the slightest interest in football, or if you are a novice investor and want to learn more, have them participate in a fantasy league (perhaps with you).
You may be surprised what a super-charged learning experience it’ll be, and how many investing lessons can be learned week to week on the fantasy gridiron.
Here are 15 traits and lessons that will help you score big each week in fantasy football league, as well as your investment portfolio:
1. Research – You need to learn how to research who to choose for your team. Homework must be done on players, their positions, if they are injured, how they’re fitting in with a new team, etc.
2. Quick Decision-Making – If you participate in a live electronic draft, quick decisions are in order. You don’t get all day to dilly-daddle. You have to pull the trigger quickly. It may not be often, but it’s a must needed investing trait, usually at crucial times.
3. Sentimental Picks – Even though I’m not a fan, I felt compelled to pick Peyton Manning this year because of what he’s been through (I didn’t). Maybe lessons will be learned why it’s not the wisest idea to let emotions get in the way of making decisions.
4. Spotting Value – Intuitively, certain players will become less attractive at times. A super-star running back who missed the last 10 games of the previous season will be shunned. Taking a risk on somebody others have long forgotten, and being there for an explosive comeback may pay enormous dividends down the road. Starbucks (SBUX) trading under $10 in 2009 comes to mind.
5. Riding Winners – There will be players during the season that seemingly can do no wrong. They will be the ones receiving player of the month accolades. They are your momentum stocks and you ride them until they break. See: Netflix (NFLX) July 2011
6. Selling Losers – Admitting mistakes is a huge impediment to successful investing. How quickly do you admit that the “sure-deal” kicker is costing you wins? See: Netflix July 2012
7. Teamwork – Ask for help if you don’t know who to pick. As in investing, the final decision is yours, but you may need to invoke many opinions and thoughts to get to your final conclusion.
8. Diversification – Unless the 49ers have a tremendous passing team, you probably will not do so well with their top 2 wide-receivers and tight-end every week. Spread it around a bit. Don’t put all your eggs in one basket comes to mind.
9. Building a Portfolio – How do your stocks correlate? Who are they playing against? Will all your receivers be playing in cold, outdoor stadiums at the same time in December? Do you have holes when your stars players enter a bye week?
10. Randomness – These are lessons a textbook cannot teach. How do you explain the star quarterback that scored 300+ points in last year’s league going down with a broken leg in the second week? We’ve all had investments that look great on paper, but for some unknown reason go very very bad – great lessons to learn, and the earlier the better.
11. Blue Chips – Just as there are so few blue chip stocks, there is a limited number of NFL stars. After about 15-25 players, you really need to do that homework. The trick is also identifying who’s going to be the new blue chipper, and who’s on the way out.
12. Recalculating – Throughout the season, how do you re-evaluate your players/stocks? Is there a “stop” where enough is enough? What criteria are you using? Are you watching the waiver wire and digging into what other players/companies are available?
13. Buy What You Know – Peter Lynch’s old adage of buying what you know seem so simple, but in today’s investing world, it may be too simple. If you’re a Jets fan, you don’t pick 5 players from your own team because you know all the players – you may even have to force yourself to pick Tom Brady.
14. Herd Mentality – If you’re doing fantasy football right, I’m going to guess you have to go against the grain a bit. If you are prone to picking the top 10 ranked players on NFL.com, you may also be prone to picking from the “Top 10 Stocks” list. Those lists almost assure you that you’ll have a tough go of it. You have to be able to make decisions independent of the herd.
15. Hype – There is always a company on a roll getting the star treatment. Media makes them seem invincible, and a self-fulfilling prophecy starts to occur. These may pay-off in the short-term, but long-term are likely investing landmines. They are the trendy rookie quarterbacks named starters in week 1 that the pundits are gushing over, but 17 weeks from now they’ll be struggling to finish the season. Hint: you can “Like” See It Market on Facebook (FB), or even post this on your wall.
Using a textbook to teach kids about investing at a young age will likely fail. Instead, try a non-conventional approach and participate in a fantasy football league. They’ll likely learn numerous investing traits and will benefit from the skills obtained down the road. Have a great weekend.
Disclosure: At the time of this writing Ross Heart and Heart Capital LLC did not own any shares in any company mentioned in this post. The author is participating in a NFL fantasy league for the first time in over 10 years, where he is acting purely as an “assistant.” He may have actually inquired during a league draft if RB Corey Dillon was still available and has very limited fantasy league experience.
Heart Capital does not offer investment advice via this medium. Under no circumstance whatsoever do these postings, opinions, charts, or any other information represent a recommendation or personalized investment, tax, or financial planning advice.
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Twitter: @heartcapital and @seeitmarket Facebook: See It Market
No position in any of the securities mentioned at the time of publication.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
