If you don’t know by now, I am a huge basketball fan, and, of course, like every avid fan I have a bracket that is getting busted by the minute. When you really break it down, there are so many similarities between picking a team to win in the tournament and choosing a winning stock.

Untrustworthy

By using whatever method they want, people are able to try and perceive what they think is going to happen in the stock market. They look for signals that have worked in the past and hope that the same trend should follow; however, when time comes for a stock to perform it doesn’t always turn out so great. Regardless of what signs the stock is showing, in the end, you are only guessing, and the stock can decide to do whatever it wants.

Just like untrustworthy stocks, so too are college basketball players and teams. Sure a team may have great credentials, a talented group of players, and settle in with a high ranking, but when times comes to play you never really know what the team will do. We see this all the times with the upsets that happen, hence the phrase “March Madness.” Just look at George Mason a couple years ago or Duke right now. Most people didn’t even give them a chance, yet they overpowered numerous teams that were suppose to be a lock to make it deep into the tournament. It is also important to remember that these teams are comprised of just kids. They aren’t professional athletes and most of them never will be, so why should we rely on them to give us the results that “should’ happen?

Momentum can be key or it can be disastrous

In the market, sometimes traders are able to invest into stocks that are gaining momentum. Perhaps a couple of good things happened, and the stock is slowly and slowly building up steam. So why not ride the wave and generate the return? At the same time, if you get into a momentum stock too late, then you could end up losing money. This same idea doesn’t stop in bracket picking.

Generally the week before the official NCAA tournaments, aspiring teams are playing within their conference finals. There are always teams somewhere in the middle or even at the bottom, that will manage to put some good games together and play their way into the tournament or to a higher seed. Essentially there momentum has helped them to keep winning. So when creating bracket picks, many may consider to keep riding the momentum the team was on. Sometimes that may pay off, while other times the momentum has quickly died off and the team is gone pretty quickly.

Regardless, teams that shouldn’t will keep winning

Again, I will bring up George Mason. Often times there will be a team or two that, on paper, seem like they wouldn’t be able to match up or stay competitive with anybody; however, when times comes to play they just won’t stop winning. Sure they have some great prospects and possibilities, but when it came down to crunching the numbers there should have been no way.

I like to compare these teams to speculative stocks. With detailed research or great background knowledge of the team, somebody will take a chance on them.

You will want to punch yourself in the face.. or at least somebody else’s

Just like in the stock market, there will be teams that you strolled across and saw all the signs, but you didn’t think they could win anything or even lose for that matter. When the clock strikes 0:00 the team actually did what the signs told you, and now your are regretting and second guessing yourself.

Final Thoughts

I’m sure there are many other ways you could relate the two activities, but I need to go punch somebody in the face…