Mike Kueber's Blog

October 17, 2013

Stock-market lesson learned from fantasy football

Filed under: Investing,Sports — Mike Kueber @ 4:15 am
Tags: ,

Fantasy football is a game that enables several friends to form a football league, with each acting like a general manager via drafts and trades to develop a roster of players.  And then each week one individual’s roster competes against another’s on the basis of basic NFL statistics that are commonly reported in the newspaper.

Fantasy football has been played since 1973, but its popularity was initially limited because it required so much bookkeeping.  That all changed in 1997 when CBS developed an online game that streamlined most of the bookkeeping.  Within three years most major sports websites, including ESPN and Yahoo, were hosting fantasy football leagues, and now there are more than 19 million people playing online.

My son Tommy formed two ESPN fantasy leagues this year and I’m in both of them.  As a kid who grew up comparing baseball statistics on the back of baseball cards, and as a fan who enjoys NFL football more than any other sport, this game is perfect for me.  I love watching my points roll in on Sunday (and Thursday and Monday, too), and then every Tuesday and Wednesday I make adjustments to my team based on which teams are playing each other and what players are free agents.

The most surprising thing about fantasy football is the amount of information that the websites provide about each player – information not only about past performance, but also about future predicted performance.  Obviously, the website’s guidance re: future performance depends on the skill of the website’s panel of experts, but most general managers are reluctant to deviate very much from the experts because those experts obviously have a lot more information and have spent a lot more time analyzing the information on each player.

And this brings me to the stock market.  If I am reluctant to disagree with a panel of experts regarding the performance of players whom I study and observe very closely, why would I think myself competent to buy stock from someone who is probably much more knowledgeable than me?  If a sports website is able to produce such an impressive display of information and give it away online, can you imagine the level of proprietary information that professional investors develop in making their million- and billion-dollar decisions?

The chances of some regular guy in San Antonio consistently out-smarting the market seem remote.  But, on the other hand, it’s just as unlikely that an amateur investor will do something really stupid, provided he diversifies.

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