Picking Winners
I know it isn’t for everyone, but the NCAA tournament (and, without meaning to give offense to to those who are adherents of other college sports, the Division 1 men’s basketball tournament has to be considered THE NCAA tournament) has always found a way to creep into the workplace. Not just the ubiquitous grid sheets, but even – in pre-Internet days – with folks importing tiny black and white TVs, or listening to the games on those little transistor radios. It’s much easier to stay up-to-date these days, of course (unless your workplace blocks access to such things).
Ultimately, the “magic” of the contest lies in the basic premise that on any night any team can beat any team in the nation – and you need look no further than George Mason University’s toppling of UConn last week to see that principle in action.
The tournament itself is a marvel of design, IMHO (for those who are interested in how this process works, it is outlined at http://www.ncaasports.com/basketball/mens/story/9183455). You’ve got teams that performed well all season – and teams that perhaps languished most of the year, but who came on strong heading into the final weeks. You’ve got teams you’ve probably never heard of, from conferences that are just as obscure – alongside teams and conferences whose participation in these contests is storied. And then, there’s always the possibility that our own alma maters will have a chance to shine in the national spotlight.
However, for those of us who haven’t fervently tracked college basketball this year, the process of filling out those NCAA tourney grids can be daunting. The “smart” money tends to favor schools that are top-seeded, particularly if they have done well in previous tournaments. There’s an understandable tendency to be loyal to one’s alma mater – at least for one round. Still, anyone who knows anything about the way these pools pay off, also realizes that the way you win is by picking a key upset (or two).
In essence, most of us pick our teams by a combination of alma mater-oriented loyalty, a tendency to reward past performance, and an inclination, in the absence of any compelling distinctions, to go with the name(s) we recognize. What strikes me as intriguing about this process is that seems to have a strong parallel with how plan sponsors – and participants – go about making their investment fund picks. There really is power in an established name brand, participants continue to display a disproportionate affection for employer stock, and yes – ubiquitous fund disclaimers notwithstanding, past performance is, IMHO, commonly relied on as a proxy for the future.
These heuristics are certainly necessary when you have an imperfect knowledge of the choices, when you have a limited amount of time to make them, and when you lack the ability to make changes in those initial choices. However, as fans of Duke, UConn, or North Carolina can attest, even apparently good choices can turn out to be disappointments in short order. The good news is that when it comes to picking retirement plan options, we can take steps to cure that imperfect knowledge, and we can change those picks over time, as circumstances warrant.
The bad news – is that most don’t.
- Nevin Adams editors@plansponsor.com
Ultimately, the “magic” of the contest lies in the basic premise that on any night any team can beat any team in the nation – and you need look no further than George Mason University’s toppling of UConn last week to see that principle in action.
The tournament itself is a marvel of design, IMHO (for those who are interested in how this process works, it is outlined at http://www.ncaasports.com/basketball/mens/story/9183455). You’ve got teams that performed well all season – and teams that perhaps languished most of the year, but who came on strong heading into the final weeks. You’ve got teams you’ve probably never heard of, from conferences that are just as obscure – alongside teams and conferences whose participation in these contests is storied. And then, there’s always the possibility that our own alma maters will have a chance to shine in the national spotlight.
However, for those of us who haven’t fervently tracked college basketball this year, the process of filling out those NCAA tourney grids can be daunting. The “smart” money tends to favor schools that are top-seeded, particularly if they have done well in previous tournaments. There’s an understandable tendency to be loyal to one’s alma mater – at least for one round. Still, anyone who knows anything about the way these pools pay off, also realizes that the way you win is by picking a key upset (or two).
In essence, most of us pick our teams by a combination of alma mater-oriented loyalty, a tendency to reward past performance, and an inclination, in the absence of any compelling distinctions, to go with the name(s) we recognize. What strikes me as intriguing about this process is that seems to have a strong parallel with how plan sponsors – and participants – go about making their investment fund picks. There really is power in an established name brand, participants continue to display a disproportionate affection for employer stock, and yes – ubiquitous fund disclaimers notwithstanding, past performance is, IMHO, commonly relied on as a proxy for the future.
These heuristics are certainly necessary when you have an imperfect knowledge of the choices, when you have a limited amount of time to make them, and when you lack the ability to make changes in those initial choices. However, as fans of Duke, UConn, or North Carolina can attest, even apparently good choices can turn out to be disappointments in short order. The good news is that when it comes to picking retirement plan options, we can take steps to cure that imperfect knowledge, and we can change those picks over time, as circumstances warrant.
The bad news – is that most don’t.
- Nevin Adams editors@plansponsor.com
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