What I See When I Watch Basketball
“Only one team can win each game, but every single member of both teams is doing the absolute best they can do. And that’s my definition of winning—in basketbal
It’s my favorite time of year again: March Madness, the NCAA competition held each spring to determine the national champions of college basketball.
Many fans look forward to predicting who’s going to win the whole thing—what’s become known as “bracketology”—but not me. In my mind, March Madness is captivating because it’s completely unpredictable. What I love is witnessing an arena full of athletes trying their absolute hardest, working together to achieve a common goal. Watching college basketball provides clear evidence that we, as human beings, can do so much more together than we’re capable of on our own.
In this way, it reminds me of the human ingenuity that drives the stock market. The value of the stock market grows every year because of the power of people to solve problems in more and more inventive ways. In both basketball and markets, we don’t know who is going to win, but we know someone is going to win—and that win will carry us all forward in some way.
What I’m interested in is seeing all these talented, dedicated people deal with uncertainty. How do they come together to solve problems? What works and what doesn’t? What do they learn in the process? Only one team can win each game, but every single member of both teams is doing the absolute best they can do. And that’s my definition of winning—.
What I love is witnessing an arena full of athletes trying their absolute hardest, working together to achieve a common goal.
Typically I watch a game once, and if it’s a team I’m really interested in, I’ll go back the next day and watch it again. Many of my friends are amazed that I’m willing to watch a basketball game when I already know the score. I value process so much that knowing the result doesn’t diminish the experience. This time I’m trying to figure out the science of how the game was played—to see what was skill and what was luck. Were both teams performing at a high caliber, or was one team better prepared or better coached than the other? That’s what I'm looking for. I want to learn from the experience, just like the players and coaches do.
This is a lot like what I’ve done over the course of my career in investment management. When we talk about empirical research in the science of finance, we mean studying the way stocks have performed over the course of the past 100 years to understand more about how the market works. We watch the game over and over and over again.
Because I’m getting so much more from a game than its outcome, I’m not devastated when my team loses—though I’m thrilled when my team wins. I understand that individual games and tournaments are just steps along a team’s journey. Most long-term fans feel the same way I do. Team allegiance gets passed down through generations, and fans don’t abandon their teams after a loss. They stick with them. Kind of like how long-term investors understand that the market will deliver short-term ups and downs, but provide a worthwhile reward in the long run, to those who stick around.
DISCLOSURES
The information in this material is intended for the recipient’s background information and use only. It is provided in good faith and without any warranty or representation as to accuracy or completeness. Information and opinions presented in this material have been obtained or derived from sources believed by Dimensional to be reliable, and Dimensional has reasonable grounds to believe that all factual information herein is true as at the date of this material. It does not constitute investment advice, a recommendation, or an offer of any services or products for sale and is not intended to provide a sufficient basis on which to make an investment decision. Before acting on any information in this document, you should consider whether it is appropriate for your particular circumstances and, if appropriate, seek professional advice. It is the responsibility of any persons wishing to make a purchase to inform themselves of and observe all applicable laws and regulations. Unauthorized reproduction or transmission of this material is strictly prohibited. Dimensional accepts no responsibility for loss arising from the use of the information contained herein.
This material is not directed at any person in any jurisdiction where the availability of this material is prohibited or would subject Dimensional or its products or services to any registration, licensing, or other such legal requirements within the jurisdiction.
“Dimensional” refers to the Dimensional separate but affiliated entities generally, rather than to one particular entity. These entities are Dimensional Fund Advisors LP, Dimensional Fund Advisors Ltd., Dimensional Ireland Limited, DFA Australia Limited, Dimensional Fund Advisors Canada ULC, Dimensional Fund Advisors Pte. Ltd., Dimensional Japan Ltd., and Dimensional Hong Kong Limited. Dimensional Hong Kong Limited is licensed by the Securities and Futures Commission to conduct Type 1 (dealing in securities) regulated activities only and does not provide asset management services.
RISKS
Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful.
Diversification neither assures a profit nor guarantees against loss in a declining market.
CANADA
These materials have been prepared by Dimensional Fund Advisors Canada ULC. The other Dimensional entities referenced herein are not registered resident investment fund managers or portfolio managers in Canada.
This material is not intended for Quebec residents.
Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise noted, any indicated total rates of return reflect the historical annual compounded total returns, including changes in share or unit value and reinvestment of all dividends or other distributions, and do not take into account sales, redemption, distribution, or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.
