NFL Draft and Selecting Individual Stocks

Last month, the annual ritual of the National Football League (NFL) took place.  It was the NFL’s draft where each NFL team selects college players for their respective teams.

Each team has scores of personnel that evaluate each of these players and their specific strengths and weaknesses. They watch the college team game tapes; they have private team workouts; the college players attend the NFL workouts.  During these workouts, they review all of their physical attributes from height and weight, how fast they run 40 yards and how many times they can bench press 225 pounds.

They also give them a mental aptitude test and even go as far as having individuals look at their backgrounds to see if they could determine any insight to whether or not they should select the player in the draft.

With all this analysis and work evaluating these individual football players, you would think that they would be able to determine who would be an excellent NFL football player.  You would be wrong.  With all this analysis, dumb luck seems to be a better approach.

While a few players will obviously stand out as having blue-chip credentials, most of the players are questionable if they will be able to play at the high standards of the NFL.

It seems that even with all this analysis done by the various teams they are still unable to determine with any regularity who the best players will be.

As I watched the draft, I hoped that my beloved New York Jets would be able to find a few Pro bowl (think All-Star) players in the draft, the thought came to me that the draft and the analysis is similar to the stock market analysis done by many stock pickers.

Although these stock pickers spend considerable time analyzing the companies (similar to the time spent evaluating college football players for the draft), the stock pickers also do not have a very good track record of predicting which companies will turn into All-Stars.

Both professions – if they are being honest – will tell you that quite a bit luck is required to successfully pick individual football players or companies.

The New England Patriots have been a dominant football team for the last decade largely on the strength of quarterback Tom Brady. You would think Tom Brady would be an easy selection for the NFL teams when he was available for the draft coming out of the University of Michigan.  You’d be wrong.

Tom Brady was not selected until the sixth round.  All of the analysis from the teams believed he would be a long-shot at best to even make a team.  Obviously they were wrong.  Tom Brady will be considered one of the best quarterbacks to have ever played in the NFL.

It’s understandable that people would believe that individuals who devote time and effort to seriously evaluating both individual football prospects and individual companies could add great value.  However, the records of both indicate otherwise.  The major factor being that it is hard to predict the future.

So while I hope the New York Jets have found some diamonds in the rough in this year’s draft, history is not on our side.  This year, I’m hoping for luck.

When you are investing, don’t depend on luck.  Invest in large asset classes – not on individual stocks recommended by so-called experts.  Instead, use the power of the entire marketplace to ensure that you assemble a blue-chip portfolio consisting of all publicly traded companies.  It would be similar to drafting the entire incoming class of NFL prospects. 

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The foregoing content reflects the opinions of Crimmins Wealth Management and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.

About Dan Crimmins

Dan Crimmins, co-founder of Crimmins Wealth Management, is a financial coach and fee only financial planner. Have a financial question? ASK DAN


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