Posted by Cognito on Wed, Nov 19 2014

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Play Fantasy Football – Improve Your Investment Strategy

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The chilly air signals one thing for sports fans in the United States – the impending NFL playoffs and countdown to the Superbowl. Not to be left out is every fan’s affiliated passion: fantasy football.

According to the Fantasy Sports Trade Association, the $1 billion annual business will have about 37 million people participating from the sidelines this year. The online game requires participants to create their own “dream team” of players from across the various teams, whose individual performances are then tracked and scored throughout the season. Fantasy football results in numerous monetary prizes for the winners, as well as year-long bragging rights.

What some players might not realize is the best ideas for picking a great fantasy football team are the same concepts that can help you earn money when composing an investment portfolio. In reality, fantasy football players operate much like fund managers because both work with limited investing capital as they determine what to buy amongst floods of information.

Fantasy football embodies many of the same principles that investment managers might favor, such as research, building a portfolio, diversification, seeking value and planning your budget. In years past, some legendary Wall Street figures, like lucrative billionaire hedge fund managers Stanley Druckenmiller and Paul Tudor Jones, have operated a fantasy league – worth $1 million.

By this point in the season, many fantasy gamers are finding themselves out of the running for the playoffs and, like most failing investors, don’t quite understand where they went wrong. Here are 5 tips that will help you get to the playoffs in your fantasy football league, and possibly win big in your investment portfolio:

1. Research – Do your homework! Before you draft make sure you are up-to-date on all trades, free agent signings and pre-season player performance. Be sure to also pay attention to what the experts are saying about the players, their positions, possible injuries and how they’re fitting in with a new team. Some fantasy players can spend several hours, even days, coming up with a strategy for draft day, and the same can be said for investors when mining through options for stocks and bonds.

2. Build a Portfolio – Lay the groundwork! Building the right fantasy team and portfolio is a matter of balance. Thrilling new players and companies offer the prospects for rapid growth and great dialogue, but on the other hand veteran players can bring more consistent results. Essentially a complete portfolio is what keeps retirees out of the workforce and fantasy football players in route to the playoffs.

3. Diversification – Don’t put all your eggs in one basket! It is important that your fantasy team be equipped with players who have different skill sets, allowing the team to compete effectively - no matter the occasion. In fantasy football, as in the market, things never go quite as planned, so it is important to protect your interests. For example, if your entire squad is made up of place kickers, odds are you won’t be scoring a great deal of touchdowns. The same method applies to your investment portfolio. If your success depends on a few prominent stocks driving the bulk of your returns and the market pulls back, it’s basically like missing the game winning catch.

4. Seek Value – Keep your eyes open! As the season develops, strengths and weaknesses become identified. The underestimated rookies can sometimes provide the largest returns – in fantasy football and investing. Most investments are made with an eye on the future and not the present, so be sure to establish longstanding prospects.

5. Plan Your Budget – Be strategic! Most leagues allocate a certain number of free-agent picks or mandate you pay a fee for each player. Millions of fantasy footballers will be looking for the most valuable athletes that have yet to be drafted, and if you don’t budget properly, you may be deprived of talent when you need it the most.

While investing shouldn’t be treated as a game, fantasy football serves as a great model for learning basic investment principles. So put on your favorite team’s jersey, place your final picks and get ready for game day!

By Jordan Brueckner

Finance, Return on Investment,
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