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“One Shining Moment”

Published by: Nathan Smith Date: March 22, 2019

Written in 1986 by David Barrett, the song pays homage to the players that compete in the NCAA Division I Men’s Basketball tournament. Barrett was inspired to write the song while watching Larry “Legend” Bird play during the annual tournament at a bar in East Lansing, Michigan and fittingly wrote the song on the back of a bar napkin. Through a series of fortunate events, the song got passed around until it found its way to a CBS executive. The song debuted after the tournament in 1987 in which Indiana defeated Syracuse. So this year I have decided to take a different track in how I determine my perfect bracket for the tournament. With an estimated 70 million brackets filled out every year, it is a fascinating study into how people choose their perfect bracket. Some pour over historical data, others go with mascots, and then some go with the picks of their favorite expert. I noticed this year when filling my bracket out that there is an autofill option that you can choose, and I decided to go with a random bracket with the caveat that it had to include a matchup between my alma mater Purdue and Tennessee in which the former beat the latter.

 

For most tournament fans, the one shining moment is defined as the window of time between filling out your perfect bracket and the first game that you pick wrong. This year my one shining moment lasted one game before my perfect bracket was busted. No one has ever picked a perfect bracket of all 63 games, and probably never will, but that won’t stop people from creating ever more inventive ways to try. Warren Buffett famously offered a billion dollar prize in 2014 to anyone who could pick all the games correctly. To read a great article about the stats behind the tournament click¬†here.

 

Luckily for investors, we don’t have to create the perfect portfolio to achieve long-term financial freedom, and in fact, most investors don’t need to take excessive amounts of risk to get there either. One of the questions that we often get from clients is how do we feel or think about the markets and does that affect the way that we invest money for them. The answer is quite simply that we don’t let our thoughts about the market influence how we manage portfolio allocations, but instead, we allow our clients’ goals to dictate and determine the type of portfolio strategy that will lead to the highest long-term probability of plan success. Two clients the same age with comparable assets may hold very different allocations because their goals are different. In the cases where a client has the flexibility to add more risk without affecting the long-term viability of their plan, then some amount of speculation can be added to the portfolio. Whether cryptocurrency, 3-D printing, marijuana stocks, etc., there have been more than a few smaller sectors of the market that have led to excessive speculation then crashing after the wave has subsided, but for those lucky few investors that managed to get in and out at the right time, these small manias lead to spectacular gains.

Picking the perfect tournament bracket will almost always involve choosing the David’s of the tournament that upset the Goliath’s. Investors that want to speculate in their portfolios should only do so with money that they can afford to lose, and remember that in the game of planning for your financial freedom excessive speculation can lead to a portfolio and long-term financial plan bust that could prove too much to overcome.