Skip to main content

Fantasy Football Psychology

The investor’s chief problem- and indeed his worst enemy- is likely to be himself  Benjamin Graham

I have always enjoyed sport and particularly football. I blame my father’s adulation for Liverpool FC. There will be some of you reading this who will already be saying, “Oh dear. A sports fan. I cannot relate to him. I will stop reading!” However please bear with me for a little time. There is something everyone can learn* from being an armchair sports fan that will make you a better investor.

Allow me to explain. Before I got into share investing, I developed a keen interest in running my own Fantasy Football team, an online game run by the English FA Premier League. This is an incredibly popular game that is offered free and has grown to well over 5 million players by the 2019-20 league season. It is replicated by many newspapers too, where the prizes are usually more lucrative.

The game is fairly simple. The tactics are less so. You have a budget of £100 million and you use that to buy a squad of 15 Premier League players. That must include 2 goalkeepers, 5 defenders, 5 midfielders and 3 forwards. Each week, players score points based on their actual performance. Points are awarded for saves (goalkeepers), not conceding (defenders and midfielders) as well as assists and goals all players). Bonus points are awarded for the players that perform best. When buying a team, the best and usually most known players (typically forwards and goal scoring midfielders) are the most expensive whereas the weaker and unknown players are the cheapest. You are only allowed a maximum of three players per Premier League team (so bang went my idea of replicating the Liverpool team…) You are allowed to trade one player “for free” each week, with a points deduction if you trade multiple players. The skill is to buy a team with the right balance of high quality high performing players and “value” players that will outperform. Catching a player at the right time will often be very beneficial as momentum is key in football (the forward who hits a purple patch of goal scoring; the team that learns how to keep clean sheets). Any of this starting to sound familiar?

One of my friends used to describe it as “competitive admin”. Admittedly it does attract a certain type of person.

The truth is however that trading and investing in shares is both a business and a game. By learning how to develop an “edge”, you stand a better chance of beating the Market and making good returns. I know someone who works in marketing major newspapers and he told me that it is the same consistent group of individuals that win all of the Fantasy Football style leagues that the newspapers run. Some of them do it as a full time occupation. They have all developed a market-beating edge.

I found that after my first season, I learnt how to play the Fantasy Football game to the point that from 2.5 million players (back then) I ended that second season in the top 6,000. It was the realisation of (a) the similarity to share investing and (b) the fact that if I could perform well at Fantasy Football I potentially could translate these skills into actually making some money. So that began my journey into share investment.

So what did I learn from Fantasy Football that helped me as an investor?

(1) Having a good understanding of players and analysing the players you pick is very helpful indeed in picking a winning team and reduces (without eliminating) the risk of picking dud players. So learning and analysis is important.

(2) Staying “on it” every week is vital. If you forget to pick your 11 out of your squad, if you miss injuries or players going out of form or fail to choose the right team “captain” (scoring double point), you can very quickly start to underperform. So regular management of your risk on the downside is crucial. This is not the same as over-trading. Actually you could not put automatic sell (stop-loss) orders on players in Fantasy Football, which is a great tool in the real life investor’s armoury. Ironically my Fantasy Football performance has dipped the more I’ve got into share investment as I’ve just had the time to be “on it” like I used to….

(3) Being ruthless with under-performers. Although there was the odd maddening player who used to have a good week and then two off weeks before scoring a hat-trick again, this was actually quite rare. Usually a decline in performance tended to indicate a new pattern of loss of form. Much better to get rid quickly and bring in a new rising performer. In a well-chosen squad of 15, you will always have 2 or 3 perennial underperformers. What you do with those underperformers is key to your performance. Interestingly I knew someone who won one of the newspaper competitions and he used to regularly incur points deductions by bringing in 3 or 4 new players to replace under-performers. This action (in the faster moving world of Fantasy Football where the profit warning equivalent came on you much quicker) led him to reap dividends. Getting emotionally attached to players (who are let’s face facts people after all) is dangerous.

(4) Being constantly on the lookout for “value”. There is an interesting trend in Fantasy Football that after about 4-6 weeks of the season, most competitors have got a good array of high performing players in their squads. To stay ahead of this pack, you need to be identifying the forward who is about to hit a new vein of form or the mid-table promoted team that concedes few goals (with bargain bucket defenders scoring well). The sooner you snap them up, the better chance you have of picking up points before the competition. So screening for rising stars is recommended.

(5) Listening to and looking what other competitors are doing, but forming your own cold judgments. It’s very easy to get swayed by the fact that everyone has got (say) Harry Kane in their squads but actually have you looked at how many assists and bonus points he gets compared to the better value Mason Mount?

(6) Not letting your emotions get the better of you. Unexpected stuff happens. Your double point scoring captain misses a penalty and then gets sent off leading to a double negative points score(ouch!). The manager chooses to “rest” your star man. Someone clatters into your top points scorer and he gets substituted on 59 minutes (depriving him of that crucial point for staying on for an hour). You can get cross and give up. You can do “rage transfers”. You can take big risks and bring in players who might win big (but probably won’t as they are in a relegation scrap). You can hang on to players through their short term injury phase (never a good idea) on the basis that they have performed so well for you already this season. You can get scared of “taking losses early having to move out 2 or 3 that week due to the fact that they’re crocked. The people who do really well at Fantasy Football are cool and unemotional.

(7) Your star performers will over-contribute to your points haul during the season. Learning to spot them, popping them in your team and “run” them early (such as making them captain regularly) is very beneficial.

I could go on and I’m sure any Fantasy Football anoraks would come up with ten more similarities. However, one trend does emerge from the above. If you want to perform well, you must first choose wisely and then have a clear management plan for dealing with both players who will over-perform and those who under-perform. If you fail to be cool and clear-headed, you will not perform as well. Psychology is so important.

I am going to continue the theme of psychology in the next blog, applied to actual trading and investment. I’m a practical person, so will tell you what I’ve learned from experience rather than just teach the theory.

*This blog is published subject to this disclaimer which you must read and which you are deemed to accept if you carry on reading.


Popular posts from this blog

How I pick shares- Part 5 (Management)

Bad directors rarely become good directors  Richard Crowe (aka the Cockney Rebel) I listened to an excellent  podcast  recently on PI World with well known investor Richard Crowe a.k.a. Cockney Rebel. He has developed a specialism in buying shares in turnaround situations. In the course of the podcast he talked about several companies which he has invested in recently and how the common denominator was good management. It is a truism that if a company is well run then the cards are stacked in its favour. Conversely bad management means that any company, however great its ideas, will have an uphill struggle if it wants to succeed. To quote a rather memorable phrase from investor Nigel Wray,  a fish usually rots from the head . So what makes a good manager? Warren Buffett has spoken extensively about this. He wrote about Tom Murphy of Cap Cities- such an example: I mean, no one had either the ability -- no one could top his ability or integrity, in terms of the way he ran Cap Cities for

17 Books to get you started

  Reading brings knowledge and knowledge is power; therefore reading is power  Emma Chase One or two people I've been speaking to recently have asked me for advice on how to get started in the world of share investing. I wrote my story back on  15 February 2020 , giving an overview of how I got into the interesting world of trading and investment in shares*. The key to it (and it is really unavoidable) is reading. The good news is that there are a lot of great books out there to choose from. With the Internet you can supplement your diet with podcasts, blogs (like this) and even YouTube videos however in my view there really is no substitute to learning from some great investors by reading. I've included links below mostly to Blackwells in Oxford (one of my favourite places in the World). You may find the book cheaper on Amazon or eBay who both offer second hand editions. However I am a fan of Blackwells as they offer an excellent range of investment books, many of which you ca

How I pick shares- Part 3 (Hidden Value)

Value investing is at its core the marriage of a contrarian streak and a calculator. - Seth Klarman Thank you for the encouraging comments that I've received in the last couple of blogs*. It's nice to find out what I write is of help to people. Just to recap, in the first part I looked at how  gathering knowledge  is a good thing to start with. In essence the better researched that you are, the better chance you have of success. As Peter Lynch put it memorably, If   you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards. In the second part, I began to look at  value  and how you can start to find those undervalued companies that have a decent chance of growing into their true value.  You actually need to train yourself to think independently of the herd, because if everyone else had thought they were undervalued and had bought the stock, the price would be a lot higher than it is. This is why it