Investment Madness

What can investors learn from “March Madness?”

Source: FiveThirtyEight

The past week, productivity has hit the skids as millions of Americans have focused on 94 by 50 foot hard courts around the country. What can investors learn from our annual basketball mania?

First, predicting the future is hard. All kinds of variables come into play in a college tournament. Who knew powerhouses like Kansas and Maryland would be upset by their smaller rivals? There are investment surprises every day as well, from product announcements to merger madness to new regulations. Expect—and plan for—the unexpected.

Second, upsets happen, but the odds still favor the stronger team. Kentucky is still the favorite, and no one expected Harvard to make it to the second round. (They didn’t.) Similarly, strong financials and managers usually beat shaky numbers and an inexperienced team. The race isn’t always to the swift, but that’s the way to bet.

NCAA Men’s Basketball Tournament % Wins per rank. Source: Wikipedia

Finally, there’s lots of noise out there. It’s easy to get distracted during a free-throw or when following the market. The media spend billions of dollars trying to get us to notice the trees rather than the forest. The goal in basketball isn’t to make a fancy play, it’s to get the ball in the hoop. Investing isn’t about buying winners, it’s about getting the best return with the lowest level of risk.

March madness is our annual distraction between the Super Bowl and baseball’s opening day. You may be ready to throw your bracket away, but don’t discard its lessons.

Douglas R. Tengdin, CFA
Chief Investment Officer
Phone: 603-224-1350
Leave a comment if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd •
By |2017-07-17T12:23:00+00:00March 26th, 2015|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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