What SuperCoach teaches about investing

FANTASY sports are in full swing, and share important lessons with the world of finance.

Footy’s back, and that means workplaces and homes are again filled with fantasy coaches talking gobbledygook about prices, premiums and CBAs.

But the premiums have nothing to do with insurance, and CBA does not mean Commonwealth Bank of Australia. It’s an acronym for centre bounce attendances, something SuperCoaches believe is far more important than Australia’s biggest bank.

Hundreds of thousands of Aussies play fantasy sports every year, mainly across AFL and NRL but also with cricket, soccer, NFL, baseball and basketball. A mate of mine is in a fantasy surf league.

Fantasy footy coaches get their kicks (sorry!) from picking players at certain prices, which rise and fall based on their statistics. The end result for the best coaches is reverence from mates and colleagues, and perhaps some cash prizes.

Little do they realise they are also learning valuable lessons about investment.

PATIENCE DOES PAY

Knee-jerk reactions are sadly too common in investing, as in SuperCoach. Player X has a shocker of a game, so you dump him from your team and buy someone who looks more promising, only to have your original pick play a blinder the next week.

Chopping and changing investments is an expensive exercise, and can lead to high transaction costs and regret.

During the global financial crisis and the Covid share price collapse, investors and super fund members who remained patient and held on to quality investments ended up much better off after the rebound. Those who dumped assets lost money they never recouped.

BAG A BARGAIN

If everyone had an eye for investment the way SuperCoaches seek out bargain-priced players, Australians would be richer.

Prices in financial markets and fantasy sports move in cycles, and buying any asset at the bottom of a cycle delivers the greatest chance of success. Buying at the peak means you’re behind everyone who bought earlier.

Australians who bought real estate in 2021 and early 2022, before interest rates surged and house prices fell are now kicking themselves – especially where the asset is worth less than their loan.

Longer term, every quality asset becomes a bargain. Twenty-five years ago, capital city median house prices were $110,000 to $250,000.

UNJUMBLE JARGON

While SuperCoaches wax lyrical about CBAs, dualposition status, clangers and clearances, investors deal with wacky terms such as fully franked, basis points, EBITDA and FAANGs. Understanding what they mean is important.

BANISH EMOTION Fantasy sports coaches should never pick players only from their favourite team. Similarly, being emotional about investing can kill your wealth. Too often people hold an investment they love and ride it to the bottom.

YOU CAN’T BE SERIOUS

SuperCoach is a game. Investing is not, but that doesn’t mean asset rises and falls should dictate your mood and approach to life.

If investments control you in a negative way, sell them or get a professional to manage decisions for you.

Some SuperCoaches do take it way too seriously. But when you’re battling mates for bragging rights, it’s hard not to!