NFL Week One & Investing Lessons

NFL Week One & Investing

by: Brendan Magee

As far as I can tell, the only thing that gets more attention than investing is the National Football League. People can't wait for the season to begin. I believe in large part it's because, like investing, so many people are participating in the each week's games to one degree or another. Most people do not have the athletic ability to get on the field, but they can put their heart, soul and money in to the games by gambling on the games or, the latest rage, fantasy football, which I do not fully understand or par take of. The key word in that sentence is gambling and in many ways people approach gambling on football games the way they approach investing.

I think if people could step back and recognize the similarities in how they approach and participate in football games and investing, they would do a better job of separating the two activities and the one that should be for entrainment only, gambling on football games, would not be dealt with in the same manner, as investing for your retirement.

Let's start with a game that turned out completely different than most people would have predicted. The Buffalo Bills could have conceivably been predicted to beat the Indianapolis Colts at home yesterday, but how many people would have believed/predicted and bet their hard earned money that Buffalo would pretty much blow out the Colts by a score of 27 to 14? To have profited from betting on the game you would have had to been able to predict that Buffalo would have beaten Indianapolis by such a wide margin. Most fans can tell you they may have a gut feeling or a favored outcome for a game, but they have no idea how the game will actually play out. This, with all the info that is made readily available to the betting public before the game is played.

Relate that to the stock market. How many people are making predictions about which direction the market is going to go, up, down, sideways, etc. Given all the news and information that is readily available about the economy, the publicly traded companies, political scandals, etc., any investor who is making a decision about how to invest and feels good because of all the information that is behind that decision is standing on the same ground as the football handicapper. Neither knows how the game is going to be played out in advance. Investing for retirement involves way more serious money than money bet on football games, hopefully.

Gamblers don't know who will get hurt in the game and how those injuries impact the game. They don't know which of the players was up all week with sick child, or whose marriage is on the rocks and how those events will impact the players performances. Investors are speculating on news and information that has already occurred and has already had their impact on the market. It's only unknowable and unpredictable news and events and how people around the world react that are going to move the stock market. Honestly, doesn't the investor's and handicapper's dilemma sound exactly the same?

The other similarity between the NFL and investing is the impulse of taking short term results and making long-term conclusions out of them. Yes the Colts lost, but how would you like to take your hard earned retirement money and invest it based on a hunch that the Buffalo Bills will outperform the Indianapolis Colts, Dallas Cowboys, or Philadelphia Eagles over a sixteen game season? How comfortable would you be if hundreds of thousands of your dollars were riding on whether or not you guessed right? Yet, every day some investment show or web site is telling people where the market will wind up based on the day's news and events. Think back to just a few weeks ago. How many were predicting doom and gloom based on what was happening with China's stock market. How many investors made decisions based on those recommendations? Right now I bet you would have a hard time finding 10 people who could tell you what happened in China's stock market.

Here's the deal. The NFL for the majority of people, should be used purely for entertainment purposes. If you want to bet on the games or engage in fantasy leagues, do it to your hearts content. Treat it as no more than that. Investing, especially for retirement, is serious business. Any activity with investing for retirement that remotely resembles gambling on football games should be eliminated immediately. Your wallet will thank you.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. with comments or questions e-mail brendan@coachgee.com or call 610-446-4322.