The differences between the stock market and fantasy sports provide great learning opportunities, too. Insider trading is illegal, but it keeps the stock market honest and efficient. What exactly is an efficient market, you ask? Well, it’s when everyone makes investment decisions based on the same public knowledge that Bob next door has. When you don’t play by the rules, like Martha Stewart and various other infamously corrupt former company executives, you go to jail. On the other hand, insider knowledge in fantasy sports gives you an incredible advantage over your competition. If you have private knowledge of a player’s injury, field and weather conditions, or in the case of the NBA, crooked referees, you increase your odds of success. While this isn’t an efficient market, it’ll still help you understand the stock market and keep the SEC from knocking at your door.
These are just a few examples of how you probably already know all you need to know about investing in the stock market, you just didn’t realize it. Granted, there are dozens of other theories and concepts that apply—diversifying your portfolio, insuring your “studs,” and buy-low/sell-high to name a few—so feel free to leave a comment if you’d like to discuss further. I may not be a true stock market guru, but I have won a few fantasy leagues in my day.
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