Football is a few weeks away. For fantasy football fans, that means drafts are starting soon. I thought I’d go slightly off topic, though not really because investing and fantasy sports tend to have similar patterns of behavior.
Put another way, similar mistakes and biases abound in both. So we can take what we know from investing and apply it to fantasy football or vice versa. In either case, hopefully, this post gives you something to think about while you prepare for both.
Let’s start with the obvious. Last year’s best-performing fantasy players are the most coveted players this year. This is despite any proof they can consistently put up big stats year after year.
Sure there are the best of the best players at every position that deserve to be drafted early. But every year brings a new crop of one hit wonders primed to let you down while you overpay for potential that isn’t there because they did it last year. One great year does not make a great player.
I’ll add one more point regarding one-year outlier stats. Players that have extreme years statistically regress back to their average. This goes for all players.
For example, Peyton Manning broke the single-season TD record with 55 TDs in 2013. That career best put him at the top of the QB rankings for 2014, where he disappointed with an average year.
Now, an average year for Peyton is a great year for most QBs, but it fell short for anyone who drafted him in the first round expecting a repeat performance. The same thing happened after Peyton’s record setting 2004 season with 49 TDs.
Next is the fateful favorite team bias. We’re all fans of some team and some fans get carried away.
The dividing line falls between the realists and the fanatics.
The fanatic has to draft their favorite player from their favorite team or their fantasy team sucks. The realist knows their favorite player won’t help their fantasy team because their favorite team sucks. Don’t drag down your fantasy team because you love your favorite team a little bit too much.
Every player gets a story before the season starts. Most of these stories are based on logic and common sense.
But every year, the experts toss a handful of players into a tale of boom or bust. These experts use generic facts to argue their opinions like contract year players perform better, he’s getting old, a rookie always breaks out, they’ll be playing from behind a lot, or he’s in the same role as [great player here].
The facts make the story more believable. The stories don’t mean squat. The narrative rarely lives up to reality. The extreme prediction machine is no more accurate in sports as it is in the markets.
Finally, seasonal projections mean nothing in a week to week competition. So many variables, including luck (and bad luck), determine a players season.
One fluky week can skew a player’s stats. This says nothing of the impossibility of accurately predicting many players stats for an entire season.
That said, projections aren’t entirely useless. You should be able to come up with a reasonable range – a floor and ceiling (a worst to best outcome barring injury) – for each player.
Saying Peyton Manning will throw for 4,438 yards and 35 TDs is very different from saying 4,132 to 4,721 yards and 31 to 39 TDs. Plug that range into your league’s scoring system, then divide it out to get floor (worst) and ceiling (best) expectations for each week.
Just be wary of drafting players with low floors and high ceilings too high (overpaying).
Your goal is to field a team of players that will give you the best chance to win every week but also handle the ups and downs in a season. Hopefully, this helps you find value where others don’t. And avoid the traps built up by all the noise.
Good luck this season.
- Why Not 100% Equities? – J. Rekenthaler
- Inside the Brain of an Investing Genius – Investing Caffeine
- Debunking Gold Mythology – L. Swedroe
- High Risk, High Returns? Not Quite. – N. Smith
- The Best Investment Strategy? It’s the One You’re Likely to Stick With. – B. Ritholtz
- Unfortunate Financial Ironies – M. Housel
- Valuing Growth Stocks: Revisiting the Nifty Fifty (PDF) – J. Siegel
- Two Centuries of Momentum – Newfound Research
- When the Great Alpaca Bubble Burst – Priceonomics