The following is a guest post by Ben fromYoungMoneyFinance.com about investing in the stock market.If you would like to write an article forMoney Q&A, please visit ourGuest Posting Guidelines.
A lot of us shy away from the stock market. It’s almost like we’re afraid of investing in the stock market. Sure, we know that we should invest our money, but a lot of us get nervous when it comes to doing so in the stock market. Too many ups and downs, too unpredictable.
Most of us write off our inexperience and lack of knowledge and decide to stay out of the market. However, we do spend a lot of time and energy on our fantasy football teams, and if you think about it, playing fantasy football isn’t all that different frominvesting in the stock market.
How Fantasy Football Is Like Investing In The Stock Market
LendEDU published the results of a very cool survey while we’re on the topic of fantasy football. Here are some of the interesting results…
The average season-long fantasy football player spends $286.84 on league-entry fees, while the average daily player (DraftKings, FanDuel) spends $272.52 on related fees.
The average player spends nearly 8 hours a week on fantasy football and 4.31 hours a week of work, or $1,186 in lost productivity if you factor in the U.S. median wage.
89.6% of season-long players expect a positive ROI this year, while 92.41% of daily players expect a positive ROI. Nothing wrong with a little confidence! Can we say confidence bias?
Just like managing a good stock portfolio…
1) Depth and diversification are key. A good fantasy team is made up of a number of different players, each playing a different role. A good stock portfolio also has different stocks playing different roles. You’ll have your growth stocks (ones you expect to grow in value) and your value stocks (less price appreciation but lots of dividends). You’ve invested in different industries, just as you wouldn’t have a team full of RBs.
2) You have your core players and ones you can easily trade. Your fantasy team is made up of several core players (what up Peyton!) and then your TBD players. Some weeks you’ll pick up a new player and give them a start or two and depending on how they do, you’ll either drop or keep them. Your core players, though, are your winners.
They’ve proven themselves time and time again and you’d never trade them. A good portfolio will have your winners and then stocks that you’re testing out. Don’t be afraid to buy a couple of stocks and then trade them out when they don’t live up to your expectations.
3) Perceived value. We each learn how to notice and pick up undervalued players when we see one. It earns us ultimate bragging rights. Conversely, we’re quick to trade a player while he’s still ‘hot’ when we know he’s going nowhere but downhill. Stocks are the same way.I’m always on the lookout for quality stocks that have taken a hit by the market. Perhaps some big investor has been trash talking them, or the company made a dumb mistake. It doesn’t mean they’re not a good company – rather, just that they are a good buying opportunity for me!
4) Study before setting your lineup. We all do research on our players, view their match ups, and review their projections before deciding what mix of players to use. Before picking a stock, I sit down and do my homework. Who is a company playing against? Is it the likes of the Patriots (an Apple or a Google) or the likes of the Jaguars? How has the stock performed in the past under pressure and in a competitive environment?
5) Don’t follow the crowd. When everybody is hyping up a certain player or promising huge points this week, you know not to be a sucker and believe it all. You know to stick to your guns with the research you did in #4.
6) Come game time, all the research and preparation only gets you so far. Just like a football game, the stock market is an animal all on its own. No one can predict what will happen, and there will always be upsets and shockers. However, success often comes to those who prepare.
Are you playing fantasy football this year? How’s your team doing? What do you think….is fantasy football just like investing in the stock market? I’d love to hear your thoughts in the comment section below.
The following is a guest post by Ben who runs the blog,YoungMoneyFinance.com, and he is on a mission to help young professionals achieve financial freedom by being proactive instead of reactive with their money.f you would like to write an article forMoney Q&A, please visit ourGuest Posting Guidelinespage.
FAQs
As it turns out, building a fantasy sports team is a lot like building a portfolio: you screen the stocks, funds, and ETFs, and look for the “players” that might outperform. There's no singular, “best” strategy to doing well in either fantasy football or investing.
How much money is invested in fantasy football? ›
As of last year, 29.2 million people in the United States played fantasy football, according to Statista Research. And fantasy sports in general have exploded into an $11 billion business.
Why is the stock market similar to gambling? ›
Investing and gambling both involve risking capital in the hopes of making a profit. A key principle in investing and gambling is to minimize risk while maximizing reward. Investors have more sources of relevant information than gamblers. Gamblers have fewer ways to mitigate losses than investors.
Do you think investing in stocks and shares is a good idea? ›
Investing in the stock market is a long-term strategy that should yield better returns than a savings account over five or ten years. And the longer you spend in the market, the higher your returns should be – especially if you manage your risks by investing in diverse sectors.
Is fantasy football like gambling? ›
The primary difference between fantasy sports and sports betting is that sports betting involves putting money down on specific outcomes. In contrast, fantasy football consists in picking a team of players and earning points based on their performance.
What is the point of trading in fantasy football? ›
In fantasy football, trades involve exchanging players between teams to improve your roster's overall performance. A well-executed trade can address weaknesses in your lineup, provide depth in crucial positions or simply upgrade your team's talent.
How profitable is fantasy football? ›
Fantasy football is an $18.6 billion market.
That's $6 billion more than the current estimated NFL revenue, and 4.5 times the current value of the NFL's top flight team, the Dallas Cowboys.
Can you make a living playing fantasy football? ›
Although you can technically make a living playing fantasy sports, we don't recommend it. Instead, aim to make a career working in fantasy sports – you'll still need a little bit of luck, but with passion and perseverance, you can succeed.
Who makes money from fantasy football? ›
FanDuel and DraftKings are the largest fantasy sports companies in the United States. Both companies make money through fees, advertising, and partnerships with other companies in the sports industry. Acquisitions may be a huge part of the future of fantasy sports.
Is investing in stocks against the Bible? ›
The Bible doesn't specifically state that we should invest, but also does not forbid it. Investing is mentioned in Proverbs 31:16 and used in Jesus's parables (ex. Parable of the Ten Minas found in Luke 19:11-27), implying that it is expected and normal.
Stocks have historically proven to be a reliable hedge against inflation. Inflation erodes the purchasing power of your money over time, but stocks have the potential to provide returns that outpace inflation. By investing in stocks, you can help ensure that your portfolio retains its real value over the long term.
What does the Bible say about gambling? ›
One commonly referenced verse is found in 1 Timothy 6:10, which states, "For the love of money is a root of all kinds of evil." This verse is often used to caution against the pursuit of wealth through activities like gambling, where the primary motivation can be monetary gain.
Why do we need to invest in the stock market? ›
Stocks can be a valuable part of your investment portfolio. Owning stocks in different companies can help you build your savings, protect your money from inflation and taxes, and maximize income from your investments. It's important to know that there are risks when investing in the stock market.
What are the pros and cons of investing in the stock market? ›
Investing in the stock market can help you build wealth over time and even take advantage of some short-term opportunities. But there's also the risk of losing money, especially in the short term, and taxes can get tricky.
Why trading is better than investing? ›
It depends on your goals. Trading is like a quick game for short-term gains, while investing is a patient strategy for long-term growth. If you want fast profits and can handle quick decisions, trading might be for you. If you prefer a slow but steady approach, investing could be better.
Do people make money from fantasy football? ›
Even if you occasionally make money from fantasy football, it's not likely you'll earn enough money consistently to turn it into a side hustle. If you're tempted to turn your fantasy football league into your side job, it may be a good idea to compare your winnings to what many people make from their side hustles.
How big of a market is fantasy football? ›
Fantasy Sports Market size was valued at USD 27.20 billion in 2022 and is poised to grow from USD 30.95 billion in 2023 to USD 87.07 billion by 2031, growing at a CAGR of 13.80% during the forecast period (2024-2031).
Is there a fantasy stock market? ›
The Fantasy Stock Market is a fun and competitive way to trade stocks. Many websites offer these games, but some are better than others. The best Fantasy Stock Market websites provide realistic trading environments, detailed analytics, and social features that allow traders to connect.
Is DraftKings fantasy considered gambling? ›
Most fantasy sports are considered games of skill, while Internet casino games are deemed games of chance. While the latter is illegal in most states under the Unlawful Internet Gambling Enforcement Act of 2006, fantasy sports are exempt.
