Personal Finance for Sports Fans – Ignore the Analysts & the Hype

Which would you rather do, watch sports or learn about personal finances? What if I told you that you could do both! There are good personal finance lessons to be found in the many exciting games of the upcoming NCAA Men’s basketball tournament. This is the first in a series of posts that will cover some of these lessons.

Ignore the Analysts
As selection Sunday approached, everyone had their opinion about who would make it into the big dance and who would miss out. Any coach would tell you the only way to guarantee a spot in the tournament is to keep winning. They tell their players to ignore the noise and focus on their game.

There are always going to be analysts who speculate about interest rates, oil prices, foreign wars, and unemployment. They debate whether it will be a bear market or a bull market, an up year or a down year. The basic principles of personal finance tell us to block out this noise and stick to the basics. The only way to guarantee long-term financial success is to spend less than you earn, start saving & investing early, and insure your health and assets.

Ignore the Hype
When you’re a low seed squaring off against a high seed you tend to be pretty nervous. Your opponent has been built up in the media all year long; there is a ton of hype surrounding the team’s players, coach, history, record, etc. The best way to lose the game is to listen to the media and buy into the hype. If the lower seed can block out the noise, stick to the basics, and play their heart out they may have a chance of coming out on top.

In the world of finance there’s always some revolutionary new company or new product that the media falls in love with. The CEO will be on the cover of Business Week, the company’s IPO will rocket out of the gate, and everyone will be sure they’re going to make a killing off of the stock.

The best thing you can do is ignore the hype about the company and stick with regular investments into a diversified portfolio. If the media hype is convincing and you decide you have to buy into the company, do it as part of your overall portfolio. I’m one of the people that just bought on hype in the dot com bubble and I won’t make that mistake again. I encourage you to avoid it as well.

• March Madness Money Lessons
• Personal Finance for Sports Fans – Diversification is Key
• Personal Finance for Sports Fans – Little Things Make a Big Difference in the Big Dance
• Is Your Investment Portfolio a One Man Team?
• Personal Finance for Sports Fans – Greatness Begins & Games are Won Off the Court