After a month of chats with brilliant authors on Rule Breaker Investing, David Gardner gets back to talking with his favorite podcast conversation partners: the listeners. Yes, it's time again for the monthly mailbag episode.
In this segment, listener Joe brings some timely insights to the table. If you enjoy fantasy football, you probably just participated your league's draft. Here's hoping you got the running back you wanted, and didn't get stuck with the Colts' defense. But the strategies that the winners will use in your friendly competition can, in some ways, translate to stock investing -- and vice versa.
A full transcript follows the video.
This video was recorded on Aug. 29, 2018.
David Gardner: Mailbag Item No. 3: This one comes from Joe Brown. It's a very timely note, because it's talking about fantasy football and it's that football time of year. It's just about to be here in the United States of America, so I thought this was fun. Thanks Joe, for your thinking!
"David and Fool Team," he writes. "I know David's a big fan of games, so I thought it would be appropriate to send this note at this time of year. One of the biggest games for millions of people all over the world is fantasy football. With the NFL season about to launch, it's good to reflect on the Foolish investing lessons we can learn from fantasy football." Joe has included four in his note and let's go through them.
"First, fantasy football is much like the stock market. You take a stake in a player and can reap the benefits based on the individual's performance in the game. As a fantasy manager," Joe says, "I look for players that could be both steady performers and also have high impact in certain games.
"Second, some managers will look at players [for example, celebrated quarterback Tom Brady] and think he cannot sustain this performance much longer. However, Tom Brady continues to impress doing things no other quarterback has ever done, leaving many managers standing on the sidelines. We have to let the player tell us, through performance, they can no longer sustain the level of performance.
"Third," Joe writes, "with the draft of college players, some managers put too much hope on the young performers. Oh, sure, there may be some players coming out of the gate who will be superstars. You also have several who will be duds. As a manager and investor, we cannot buy into the hype. Look for the performance. Let them prove themselves draft eligible.
"And fourth, during the season fantasy owners can drop underperforming players and pick up free agents. Many times managers drop players too quickly. For example, if quarterback Alex Smith has two bad games, a manager may drop him thinking the Redskins, for whom he plays this season [the Washington Redskins] are not for him. However, Alex Smith has proved himself a steady performer in years past. We cannot give up on our winner too quickly. It is a long season.
"To close, while the benefits of winning or losing a fantasy league range from glory to shame, the benefits of winning in investing can be life-changing. I hope you enjoyed this message. I tried to make it fun, educational, and enriching. Fool on!" Joe Brown.
Well, Joe, first of all thank you for hailing back to our mantra [to educate, to amuse, and to enrich] -- what The Motley Fool has been trying to do for many years, now. In fact, about 25 years, and so thanks for the line about trying to make it fun, educational, and enriching, because that aligns a lot with what we try to do here at The Motley Fool and certainly what I try to do on this podcast.
I've always appreciated the comparisons between games and the stock market, and certainly a fantasy game, like fantasy football. I like what you've highlighted, there, and I think we can learn a lot about ourselves as investors based on how we play these fantasy games [fantasy baseball, fantasy football]. They are very popular. I realize there will be a lot of listeners who don't play it or don't know what I'm talking about probably; but I wanted to make it clear that I think you can really simulate good thinking [trial and error] and learn a lot about yourself through playing games [in this case fantasy football], and then you can bring those insights about your own nature and the world at large and help that inform your investing.
I certainly feel like I'm a better investor today because I learned of Bill James decades ago. Then the book Moneyball by Michael Lewis came out and talked about Bill James and how he'd revolutionized baseball by being a scientist. Even though he, himself, was not an accomplished player [he was just a journalist], he actually took a scientific approach to understanding how to do baseball better. That has always helped me think about how to do investing better.
And maybe you don't have to be a professional. You don't have to be a former player, like Bill James wasn't, to be a really brilliant investor by bringing insights that you can gain about yourself and about the world at large and make them sing in your investing. So, thanks. Cheers for the note, Joe Brown. I hope you enjoy the football season.
I do want to mention that puts me in mind of an exchange I had on Twitter a few days ago with Nick Burgess, @Nicburgess. Nick was saying, "Hey, enjoyed Mark Penn and his microtrends." Nick was saying, "Did you think there were any microtrends you can see that he didn't call out?"
And I thought about it and I ended up replying, "Yeah, I think I see a new microtrend that Mark hasn't written in his book, because, of course, he can only fit 50 in his book and he's only going to publish once every decade or so; so of course new ones will show up. I think there's a microtrend against football right now. High school football. College football. Even pro football."
This is not a macro trend but I do see people starting to object to the concussions in the sport. This is certainly a very noticeable thing, so this is not news to anybody, but the microtrend might be people starting to opt out. Not following football as much. Not wanting to participate or cheer it on. I know some people like that in my own life. My brother, Tom, is very active within the CTE movement of raising consciousness about how maybe football isn't the best thing for kids to start with, but even adults, too.
I think that's an interesting microtrend to watch and you and I can watch that in the year ahead. I'm going to call that one Pigskin Boycotters, because Mark Penn does a nice job in his book coming up with a colorful phrase around each of his microtrends, so watch out for pigskin boycotters here this fall.
And before we get to No. 4, I should also mention that I got a nice note from Kenneth Rudnicki for Mailbag. I'm not going to read it in full, this month, but he was reacting [speaking of football] to combat football and the fun exchange I had last month's mailbag with somebody who talked about combat football and how that's a really interesting sport. Anybody who cares can go back and listen to the last mailbag.
But Kenneth Rudnicki, you were saying, "Hey, while combat football is an interesting thing," here's another sport that Kenneth actively participates in, and it's roller derby. That's right, Kenneth. You may remember roller derby on TV in the '80s. It's something akin to professional wrestling [maybe not entirely being real], but things have changed. It's now played as a legitimate sport. The rules are a little complicated. You can look them up online, if you like, but you can see the game can be quite dynamic because you have both offense and defense being played at the same time. Anyway, thanks for that shout-out to combat football, football, and in this case, roller derby.