diversify. buy low, sell high. repeat. it’s that simple. take advantage of the fact that 365 days a year there are opportunities to buy low, pick your spots. you will spend more time buying than selling. when you sell high, you’ll sell all (or almost all) of your stock in a player at once. for instance, matt leinart has been a buy low for quite some time now, so over the last several months i’ve been buying at the best prices i could find. at some point in the future, when his price rises, i’ll sell all of his cards over the course of a few days. i bought for months and i will sell in days. keep in mind, whenever one player rises, another is falling, there are a limited number of “hot” players at any given time, so when your player’s “hot”, sell. meanwhile, countless players may be undervalued at any given time. there are only 32 football teams in the nfl, so the number of elite qb’s is fixed, but there are plenty of scrubs and backups that on any given sunday could suddenly rise in value. there are a few players like peyton manning that are always somewhat “hot”, but those players are far and few between in the nfl. most players have a lot of ups and downs along the way and it’s reflected in their price. another reason for dumping all of your stock at once is that “hot” players tend to flame out. you are an investor, not a speculator. if you paid $10 for an autographed rc of a player 2 months ago and after a couple of big games, he’s now worth $20, sell. the future be damned. you have a solid profit, be happy. if that player goes on to the hall of fame and his card hits $400, fine, because you’ve already won. if you hold on to players because “the price might go up more”, you will lose in the long run. when you have a profit, sell and reinvest the money into one of the countless undervalued players that exist. another way to look at it is if you net a 50% profit and reinvest your money just five times, how much would you have?
investment 1. buy for $10 –> sell for $15 (50% profit)
investment 2. buy for $15 –> sell for $22.50 (50% profit)
investment 3. buy for $22.50 –> sell for $33.75 (50% profit)
investment 4. buy for $33.75 –> sell for $50.62 (50% profit)
investment 5. buy for $50.62 –> sell for $75.93 (50% profit)
…more than 7 times your initial investment! so is it worth holding onto a player and tying up your money because you think the player might go up in value? no. take the money and run. in football, this is even more important than baseball. let’s say you have one of the best rb’s in all of football, we’ll call him, steven jackson. in our hypothetical, we’ll suppose that mr. jackson plays on a very bad team, known as the rams. as a result of being on a bad team his numbers and value decline. in hindsight, the right thing to have done was to sell mr. jackson at a point when the demand was higher and then reinvest in another player. in football, there are countless variables that can hurt or help a players value, as we see with mr. jackson. his intrinsic value hasn’t changed, but his value in the market has. one or two injuries and you can take a substantial loss on a player’s value, even if that player’s healthy. there’s no way around the risk, but you can minimize it if you take the money and run. if a player’s value is up, it will probably come back down at some point, especially in the parity of the nfl. be happy with your profit. reinvest elsewhere. it’s quite possible that in the future, you may even be able to buy a player back that you’ve already made a profit on.
how is baseball different? unlike football, baseball is not really a team sport. yes, baseball does have some team aspects, but a player’s value is much less dependent on his team. this is good, because there are less things that can go wrong for your player, making baseball a safer investment. essentially, baseball is a contest between a batter and pitcher. for instance, when albert pujols is up to bat, nothing else matters. it’s albert and the pitcher, in their own dual. obviously, having protection in the lineup helps albert, but it isn’t nearly as important as having a good, healthy offensive line is for mr. jackson. no matter what, albert is going to get his and win his fair share of the duals. baseball also offers far less risk of injury, which is the biggest concern with football players. along with having less risk, baseball players are also much easier to predict, in large part due to the numbers and statistics. in football, stats don’t illuminate value the way they do in baseball. this is because in football, a player’s stats are heavily dependent on the team. not so in baseball. as a result of less risk and more certainty with players, i am not so quick to sell a baseball player. in baseball, it’s still important to take the money and run, but there’s a little more room for error due to the minimized risk factor. in football, i may sell with a 25% profit, but in baseball, i’m more likely to hold out for a bigger profit.
i’ll be honest. i consider myself an investor, however, there are times when i speculate. most investors do at some point, it’s hard not to gamble on a stock once in a while. it’s also fun! if a player has secured a substantial profit, i sometimes allow myself to keep a couple cards of that player. i rarely do this with football, mostly baseball, due to the risk factors. i don’t gamble through a bookie, i gamble through ebay. i don’t care about point spreads or wins and losses, and to tell you the truth, i don’t care about fantasy anymore either, it’s simply a tool i use to define values. intrinsic value is all that interests me. every sunday, i have dozens of nfl players i’ve already gambled on. i easily win more than i lose.
investing in fantasy “stocks” can become a job with a modest amount of capital and sound value investing (benjamin graham) techniques. buy low and keep buying low, diversify. having 25 different undervalued stocks is better than having 25 cards of the same player. with 25 different players there’s a much better chance that you will have a “hot” player at any given time and less chance of an injury killing your portfolio. each stock is like a lottery ticket, so put the odds in your favor to hit a winner. as long as you’ve bought at a price below a player’s intrinsic value, you can’t go wrong. when done properly, you can easily turn this hobby into a full time job. a job doing what you love!
