Busted

March 24, 2021 - Published by IAG Wealth Partners

Categorized in:


stephen baker QAX5Ylx lKo unsplash basketball 1

Overall record. Strength of opponents. Individual and team statistics. Shooting percentage. Rebounds. Steals. Turnovers.

The selection committee that determines the seeding for teams in the NCAA basketball tournament has an overabundance of information at their fingertips when evaluating what seeding a team deserves. Rumor has it they also use artificial intelligence to enhance their decision-making process.

Given the immense statistical resources available to the selection committee, in theory the final 16 teams in the tournament should all be 1, 2, 3, or 4 seeds, correct? Correct in theory, but wrong in reality.

Past performance does not guarantee future results, creating busted brackets.

This year only 44% of the remaining 16 teams were seeded 1-4 by the selection committee, and 25% of the finalists were seeded 11 or lower.

The results for each tournament game are created by individual decisions and plays over the course of the contest. The results are not pre-determined by past statistics.

Similar principles apply to investing.

If the selection committee would seed investments based on statistics over the last few years, their number 1 through 4 seeds would likely all be the stocks of large American growth-oriented companies. These growth stocks have significantly outperformed the stocks of smaller companies, value-oriented stocks, and international stocks in the recent past.

However, so far in 2021 those lower seeds have trounced the top seeds based on the past few years. We don’t know if that will continue through the tournament.

Making decisions that align with your family’s financial plan is more important than picking winners in an elimination tournament of basketball games (assuming you have not bet your life savings on the tournament outcome).

Your personal tournament is a lifetime that uncovers new goals and overcomes new challenges, where you need flexibility to adapt to changing rules and an experienced coach to help you develop your strategy and execute your game plan.

We are honored that our clients have chosen us to coach them in their most important game, and would welcome additional families that are looking to take their financial planning game to the next level.

 

Quote of the week: Jason Zweig: “Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”


Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial.

Past performance is no guarantee of future performance. In fact, the opposite can be true. The information contained in this report does not purport to be a complete description of the securities, markets, or development referred to in this material. Investing involves risk including loss of principal.

Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

Photo credit: Stephen Baker - Unsplash

Other News Articles