I have to admit to listening to sports radio as an occasional guilty pleasure. It’s not the highest form of communication, but can be a good mix for getting up to speed on the latest in the sports world and a welcome break from the news in Washington and on Wall Street.
Following this weekend’s Masters begins a three week stretch where you will find me nowhere near sports radio. The NCAA tournament and the Masters are behind us, baseball is underway enough that we’re over Opening Day, but not yet ready to dive into the season and the NBA playoffs are set to begin. For those of you who aren’t familiar, the NBA playoffs last into what feels like October, so their start is not a lot of cause for discussion.
That leaves only one topic for discussion, the NFL Draft.
Taking place at the end of April, the draft is where National Football League teams select new players from a pool of eligible college players. Earlier this week, two guests were interviewed at separate times on the Dan Patrick Show, a well listened to sports radio show. Both experts in their field, they discussed Geno Smith, an outstanding prospect from West Virginia University. The only trouble is, one expert spent the whole time talking about how overrated Mr. Smith is and the other spent the whole time praising him as a potential early first round selection.
To add to the noise, head coaches also visit these shows to discuss anything other than what might tip their hand. They’re known for purposefully misleading listeners to throw other teams off the trail of who they really hope to select. Agents get involved and try to hype up their respective clients’ value. Statistical experts weigh in with player data such as college stats, personality test findings and results from training sessions known as pro days or scouting combines. Confused yet? It’s truly impossible to pick whose information is best to follow.
So who really has the talent to pick the best players? Who knows? Tom Brady, one of the greatest quarterbacks of this era, was selected in the sixth round of the draft. A great value pick by anyone’s measure. One of the toughest draft day decisions of all time was made by the Indianapolis Colts in 1996. They had to select between Peyton Manning and Ryan Leaf, the two most highly touted quarterbacks in years. The Colts were fortunate and picked Manning. The San Diego Chargers gave up heaven and earth to move into the second spot to pick Leaf. You’re likely familiar with Mr. Manning’s resume. Mr. Leaf, on the other hand, was given his outright release by his third team after two lackluster seasons in the league and was last known to be spending time in a correctional facility.
Who wins? The league does for sure. Regardless of who goes where, the end results are pretty tough to argue. When you look at all the players and all the teams as a whole, the level of competition and the dollars and fans it draws in are undeniable, raking in billions each year.
So what does this have to do with investing?
You can spend all day listening to market analysts and other experts talk about the merits of this stock or that investment. You can listen to quarterly conference calls with CEOs who, like the coaches, may or may not be fully divulging information about their next innovation or latest stumble. You can listen to activist investors on two separate sides of a trade tell you why a company is good or bad. You can do your own homework or pay someone to do every kind of technical analysis under the sun. The results will be just as confusing.
In the end, you have a choice. Play the role of the coach or team, parsing through all of that supposed expertise in order to select which company is a Peyton Manning and which is a Ryan Leaf. Or, you can be the League and own a fully diversified, low cost portfolio of just about every company out there. It may not be as exciting as the gamble of Draft Day, but it’s a more successful path each and every season.