March Madness has once again offered every sports "expert" at every level in every corner of the nation and beyond the opportunity to demonstrate his/her perspicacious observations of college basketball by selecting, ranking and seeding the supposed top teams around the country. It seems as though everyone - including the president of the United States - has stopped (and stooped) to submit an opinion about what will happen in the tournament. But let us focus on the professional experts who do nothing but watch, study and analyze college basketball for a living. To seed the tournament, the National Collegiate Athletic Association (NCAA) assembled a dream team of college basketball experts from across the land who, collectively along with an endless stream of digital data regurgitated by server farms in "the cloud" and elsewhere that had sifted through and massaged trillions of bits of relevant information in a new science they call "bracketology," descended from the holy mountain of the sports gods and gave us their best prognostication for the tournament.
A funny thing happened on the way to the championship, however. Only one of the top four picks by this elite group of sports geniuses made it to the Final Four. Remarkably, none of the four number two seeds made it as well. Unbelievably, none of the four number three seeds made it either. One of the Final Four teams was actually seeded ninth which means that under the old configuration of only 32 teams, it would not have even been invited. How could all these experts and computers have been so wrong? They even had a team seeded 15 (a ranking of 60?) that made it into the round of 16. Is there a lesson here?
Just as in sports, there are "experts" in investing. Every broker is an expert dispensing keen insights into the market and generously sharing his "professional" opinion with his customers. If that's not enough, there are the research departments of the bigger firms employing elaborate staffs of overpaid, over-educated economists whose opinions always seem to be vague and long-term and whose price outlook, when asked, is curiously similar to the last tick in the market. Then there are the guys - mostly old traders that went broke - selling "news letters" with trade recommendations - for a price - from a cubicle somewhere or from their den at home. The point is that there is never a shortage of experts. And the value of their advice is always the same: worthless. After all, if they really knew what was going to happen, would they tell anyone? Would you? Do any brokers really think that it is their advice that is generating business? The best approach to retail business is to tease and tempt the customer with some "eye candy" like flashy charts and fancy sounding algorithms. Throw in some low commission rates and push-button execution and you're in business. Expert prognostications? Forget about it. They're as reliable as your discarded NCAA bracket.
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