It’s Monday morning. You’re in your office, and your mind is miles away, running numbers, crunching statistics, and making last-minute adjustments. It’s not for a meeting, but for your fantasy football team.
In simple terms, fantasy football is a season-long competition where you draft your own team and compete with teams compiled by other people. You earn points based on all your players’ real-life and real-time performance. What does this have to do with investing? There are some similarities between how people approach fantasy football, investment styles and behavioral biases.
Overconfidence can be terrible when investing or building a fantasy team. There is an adrenaline rush to outwit the system with your weekly changes and beat the competition. This same energy is felt by those who want to tweak their investment portfolio often with market fluctuations, hoping their forecasting skills or ability to time the markets will improve results. There are so many factors that make this a risky approach. Success is better achieved with patience, tuning out the noise and having a solid financial plan.
In fantasy football, you need to diversify your team with players who have different playbook styles and skills. You wouldn’t draft all wide receivers on a team that only runs. Diversification is even more important with your investment strategy. Spreading your portfolio across several asset classes can help mitigate risk in any one area and reduce overall portfolio volatility.
Everyone enters a fantasy draft with a strategy and chooses players based on a variety of criteria. But as the season progresses, you need to assess players’ performance, make modifications, and tweak your lineup. Your investment strategy also requires constant monitoring and will change with your financial situation. Periodic reviews of your goals, risk tolerance, and market conditions will necessitate adjustments.
Team loyalty and personal biases may be hard to ignore in fantasy football. You may want to pick players from your favorite team or reject ones from a rival one no matter their stats. Similarly, investors sometimes let their own biases get in the way of making sound financial decisions. They may feel personally invested in a stock they’ve held, but have a hard time letting go when it is clearly time to sell.
This is where experience matters, as a seasoned fantasy football pro or wealth advisor, your focus must be what’s in the best interest of your team.
Fantasy football is often emotional and stressful. For many, it’s well worth the time-consuming energy to achieve the bragging rights of their wins. But if they had a professional like Tom Brady guiding their decisions, they would jump at the opportunity for a simpler season hopefully yielding better results. At Biondo Investments Advisors, we are that trusted partner doing the research, advising your plays, and committed to guiding you towards financial success. Knowing our clients have the financial freedom to live their best lives is our win.
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