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Fantasy Sports and The Stock Market

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Fantasy Sports and The Stock Market

Postby stoner420 » Sun Aug 13, 2006 2:22 pm

hey guys. Tell me if this sounds familiar: I am a 20 year old sports enthusiast. I have been doing fantasy sports for like 5 years and at this point consider myself very good at them. Over that 5 years I've won approx $850 bucks on fantasy sports. I typically spend at least an hour and a half every day either watching sports or checking my teams or reading fantasy related articles. So that 850 is nice money, but if u broke it down by the hour id be making probably less than two cents an hour. Like many of you fantasy sports often takes up waaay too much of my time and has caused countless hours of procrastination of things that i should be doing.

So I was thinking... is there some other similar format that i could be better spending my time online? And it dawned on me that the answer could be the stock market. I know absolutely nothing about finance. I hate math(unless its figuring out ppg or deciphering player stats) and have never taken any courses about stocks or any of that. But with my limited knowledge, it seems pretty obvious that there are some striking similarities between playing fantasy sports and playing the market.

1. Its something that you can do on your free time while farting around on the internet.

2. Players are essentially stocks. When we draft its an initial investment based on stats and research. Ive probably seen a guy like jason bay play in 2 full games... but yet i know everything about his stats... and thinking about it, we all treat these players exactly likee stocks. We try to buy when good players are slumping and we try to sell high when bad players are streaking. We hold onto our big investments (especially in keeper leagues) yet we constantly swap our small investments for hotter investments.

3. Like many of you im always looking for ways to give my team an edge (hail mary, draft strategies, etc). This sounds similar to what good investors do.

So im wondering, for any of you who actually do know things about stocks... Does fantasy sports skill translate to investment skill? How similar are the two? Discuss.
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Postby Matthias » Sun Aug 13, 2006 2:34 pm

Here's where the similarity ends: you don't have ten billion dollar funds paying PhD's $500,000 a year trying to outscoop you on Jason Bay's batting average.

It sounds appealing. But I think the difference in competition would make this an ultimately doomed parallel. Not to say you couldn't ultimate succeed at playing the market, but the fact that you can win $850 from your friends and strangers playing fantasy baseball is not a slam-dunk that this is going to work out. Sorry to burst your bubble.
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Postby stoner420 » Sun Aug 13, 2006 2:49 pm

Matthias wrote:Here's where the similarity ends: you don't have ten billion dollar funds paying PhD's $500,000 a year trying to outscoop you on Jason Bay's batting average.

It sounds appealing. But I think the difference in competition would make this an ultimately doomed parallel. Not to say you couldn't ultimate succeed at playing the market, but the fact that you can win $850 from your friends and strangers playing fantasy baseball is not a slam-dunk that this is going to work out. Sorry to burst your bubble.



point taken. but arent there plenty of "non phd" average joes who do play the market and do well? Im not saying that my fantasy skill will translate into giving me an edge over the best of the best... but dont you think that some of the similar strategies would be helpful in giving me an edge over average joe?

I do well at fantasy sports because A. i research better than my competition B. I check my team every day without fail C. I put more time into figuring out strategies that will help me win.

I figure that if i do such but apply it to stocks than maybe i will do well at that.
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Postby Shadow of the Sun* » Sun Aug 13, 2006 2:50 pm

There are far more variables in the stock market than in fantasy baseball. It is much easier to predict David Ortiz's HR or RBI totals for a season than predict the success of a company.

This is a very bad idea if you have no knowledge of the stock market. Trust me on this one.
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Postby Tiki Barber's Barber » Sun Aug 13, 2006 3:58 pm

I think they are very similar especially in a sense of Buying Low / Selling High. How easily your fantasy skills can translate to becoming a good investor, however, is different.
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Postby Matthias » Sun Aug 13, 2006 4:17 pm

stoner420 wrote:
Matthias wrote:Here's where the similarity ends: you don't have ten billion dollar funds paying PhD's $500,000 a year trying to outscoop you on Jason Bay's batting average.

It sounds appealing. But I think the difference in competition would make this an ultimately doomed parallel. Not to say you couldn't ultimate succeed at playing the market, but the fact that you can win $850 from your friends and strangers playing fantasy baseball is not a slam-dunk that this is going to work out. Sorry to burst your bubble.



point taken. but arent there plenty of "non phd" average joes who do play the market and do well? Im not saying that my fantasy skill will translate into giving me an edge over the best of the best... but dont you think that some of the similar strategies would be helpful in giving me an edge over average joe?

I do well at fantasy sports because A. i research better than my competition B. I check my team every day without fail C. I put more time into figuring out strategies that will help me win.

I figure that if i do such but apply it to stocks than maybe i will do well at that.


Well, here's your problem.

There's no, "best of the best" stock market and another, "average joe" stock market. There's one. (Well, there's a number of boards, but in a larger sense, there's only one market). So if the Street sees a particular stock as undervalued, it will move in and snatch it up to make its profit.

Lots of people make money at stocks. Since the Depression, the stock market has returned an average 13% annual return. But you're not going to outshark anybody farting around on your computer. You may make money. You may lose money. But you'll certainly be in a pond with fish bigger than you are.
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Postby bclay » Sun Aug 13, 2006 6:27 pm

Here's another point that nobody has addressed yet - the stock market is fueled by investor emotions, specifically fear and greed. The fear part of it can make "playing" the market very stressful, which can lead to bad decisions. Not sure if you are talking about "investing" or trading, but if you're thinking about trading due to fantasy baseball experience, I'd reconsider it. If your pitcher, gets shelled, does that keep you up at night? Trust me, being on the wrong side of a big market move will. Just a thought...if you're talking about investing (ie buy and hold, etc) things are different.
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Postby Matthias » Sun Aug 13, 2006 6:30 pm

bclay wrote:if you're talking about investing (ie buy and hold, etc) things are different.


that i agree with. if your plan is to take $1,000 or $10,000 or whatever you have to play with and buy shares and then just let them sit, your chances are much better. because, over time, the stock market does do well. it's just the idea of daytrading that i think is ill-conceived.
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Postby swyck » Sun Aug 13, 2006 6:33 pm

Matthias wrote:
stoner420 wrote:I do well at fantasy sports because A. i research better than my competition B. I check my team every day without fail C. I put more time into figuring out strategies that will help me win.

I figure that if i do such but apply it to stocks than maybe i will do well at that.


Well, here's your problem.

There's no, "best of the best" stock market and another, "average joe" stock market. There's one. (Well, there's a number of boards, but in a larger sense, there's only one market). So if the Street sees a particular stock as undervalued, it will move in and snatch it up to make its profit.

Lots of people make money at stocks. Since the Depression, the stock market has returned an average 13% annual return. But you're not going to outshark anybody farting around on your computer. You may make money. You may lose money. But you'll certainly be in a pond with fish bigger than you are.

A major difference between fantasy sports and the market is that you dont actually have to beat any one. There is no Super Bowl where one team is champ and everybody else is a loser. This is not Texas Hold'em where one guy walks away with the pot. The fact is that in the market everybody can make money which is not the same as winning. Not everybody does, but that's a different thing

Actually stoner420 you may have have the qualities needed to make it in the market. Research, persistance, and constant evalution can go far. These are all qualities that can help in the market.

Not overpaying for stocks works just like not overpaying for stolen bases or closers. If you overpay for garbage you wind up losing, if you underpay for value you come out ahead. Luck plays a role, and you will need to minimize bad luck and maximize good luck.

I suggest reading Graham for a start in valuation, Lynch for market savy, Cramer cause he's entertaining, actually knows something, and has good suggestions, and finally either Ed Easterling or John Mauldin to put the fear of the BEAR in you and to give you a clue. Once you've done that your head should be spinning, but you should know enough to take it slow and steady.

If you're young then I strongly suggest doing it. The earlier you start, the greater the rewards, and the rewards are a lot greater then for fantasy sports. It's also fascinating once you start getting down into the trenches. B-)
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Postby jondunc » Sun Aug 13, 2006 6:33 pm

The styles of statistical analysis are certainly similar. I felt a lot like you do, and I'm trying out investopedia.com's free stock market simulator. Fantastic interface and a great place to try out styles without actually losing anything. Maybe that'd be a good place to try?
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