Skip to main content
 

Bernhardt Wealth Management logo

  • Home
  • About 
    • Our Team
    • How We Work
    • The Bernhardt Way
    • Affiliations
  • Our Services 
    • Wealth Management
    • Investment Management
    • Small Business
  • Resources 
    • Articles
    • News
    • News Releases
    • Videos & Podcasts
    • White Papers
    • Newsletter Signup
    • Profiles in Success
  • Client Login 
    • TD Ameritrade
    • BWM Client Portal
  • Blog
  • Contact

    You are here

  1. Home
  2. Blogs
  3. March Madness and Investor Behavior: Are They Related?

March Madness and Investor Behavior: Are They Related?

Submitted by Bernhardt Wealth Management on April 15th, 2019
  • Share on Facebook
  • Tweet Widget
  • Linkedin Share Button

No doubt many of you watched, either cheering or agonizing for your favorite team, as the NCAA men’s basketball tournament took over the screens and attentions of most American sports fans during March and early April. As we now know, Virginia, the #1-ranked team, prevailed over the scrappy #3-ranked challengers from Texas Tech, winning the final in overtime, 85-77.

Some would point out that Virginia held the #1 ranking for good reasons. They were consistently ranked in the very top of the NCAA for qualities like defensive efficiency against opponents, offensive efficiency, and other important attributes. And yet, a surprisingly low number of those submitting brackets for the NCAA tournament picked Virginia as the ultimate winner. Who was the majority pick to win the NCAA tourney? Duke.

Of course, anyone who has followed major college basketball for any length of time would not be surprised at this. After all, Duke has a well-earned reputation for winning basketball championships, having notched five of the coveted national titles, along with eleven appearances in the final game. And yet, statistically, Duke was far beneath Virginia in offensive and defensive efficiency, along with several other categories. So why, one must ask, would Duke be picked to win the 2019 NCAA men’s basketball championship by more than seven times as many people as Virginia, the eventual champion?

For a more complete explanation of this apparent anomaly and its interesting correlation with investor behavior, watch for our monthly eNewsletter in early May. But for now, suffice it to say that it is possible many people picked Duke over Virginia for the same reasons so many investors succumb to what we sometimes refer to as the “stock du jour” syndrome: recency bias and too much reliance on the media.

Duke’s impressive forward, Zion Williamson, garnered a huge amount of positive press during the run-up to the NCAA tournament. Conversely, many sports pundits lacked confidence that Virginia’s defensive style of play could carry them through the tournament to the championship. They focused on last year’s historic first round loss in the NCAA tournament to UMBC and ignored the fact that Virginia was ranked in the top five with one of the most efficient offenses this season. In other words, the opinions of the “experts,” combined with Duke’s admittedly strong credentials, likely combined to persuade many observers that, statistics notwithstanding, Duke had a much better chance of winning the tournament than Virginia. And their submitted brackets reflected that belief.

As we’ll suggest in more detail in our eNewsletter, investor behavior is often unduly influenced by non-logical and/or emotionally biased premises. Or, as the quote often attributed to Will Rogers succinctly puts it, “It isn’t what we know that gives us trouble; it’s what we know that ain’t so.” Clearly, a large majority of basketball fans “knew” that Duke was more likely to win the NCAA tournament than the better statistical choice, Virginia. How many investors “know” that today’s hot investment—whatever the media may be trumpeting—is a sure winner? And how likely are they, like those who picked Duke over Virginia—to be proven wrong?

For additional insights, watch for our May eNewsletter.

Recent Blog Posts

  • Passing the SALT: Creative Workarounds on the Horizon?
  • The Value of Good Advice—and How to Tell if You’re Getting It
  • Taking Your Best Shot: Vaccine Progress by State

Archived Blog

  • February 2021 (5)
  • January 2021 (5)
  • December 2020 (7)
  • November 2020 (6)
  • October 2020 (5)
  • September 2020 (5)
  • August 2020 (6)
  • July 2020 (6)
  • June 2020 (7)
  • May 2020 (6)
  • April 2020 (6)
  • March 2020 (11)
  •  
  • 1 of 11
  • ››

Categories

  • 401(k) (21)
  • 401(k) Retirement Planning (2)
  • Annuities (4)
  • Behavioral Finance (27)
  • Benefits (2)
  • Business (6)
  • Client Survey (1)
  • College planning (11)
  • Conflicts of Interest (4)
  • Cryptocurrency (1)
  • Cyber Security (2)
  • Debt (3)
  • Dimensional Fund Advisors (9)
  • Diversification (5)
  • Economics (34)
  • Economy (1)
  • Estate Planning (19)
  • Exit Planning (2)
  • Fiduciary (32)
  • Financial Advisor (16)
  • Financial Check-up (3)
  • Financial literacy (6)
  • Financial Planning (25)
  • Fraud (6)
  • Gordon's Life (9)
  • Health (1)
  • Healthcare (7)
  • Holidays (3)
  • Identity Theft (5)
  • Investing (97)
  • Investment Scams (1)
  • Investments (5)
  • IPO (1)
  • IRA (8)
  • Jobs (4)
  • Legacy (1)
  • Long Term Care (8)
  • Market Volatility (1)
  • Medicare (5)
  • Mutual Funds (2)
  • Philanthropic Planning (1)
  • Philanthropy (13)
  • Quality of Life (4)
  • Real Estate (7)
  • Rebalance (3)
  • Retirement (2)
  • Retirement Planning (44)
  • Saving (5)
  • Senior Issues (10)
  • Six Cs (6)
  • Social Security (8)
  • Success (10)
  • Taxes (30)
  • The Bernhardt Way (27)
  • Wealth Management (1)
  • Wealth Protection (3)
  • Wealth Transfer (1)

Refer Us

Subscribe to our Newsletter

Contact Us

Don't hesitate to get in touch with us.
We would love the opportunity to become your trusted advisor.

Phone: (703) 356-4380
Toll Free: (888) 356-4380
Fax: (703) 356-4383

Email: gordon@BernhardtWealth.com

7601 Lewinsville Road, Suite 210, McLean, VA 22102

       

Get Directions

  • Sitemap
  • Legal, privacy, copyright and trademark information

Bernhardt Wealth Management, Inc. (BWM) is a registered investment advisor with the Securities & Exchange Commission. BWM may only transact business or render personalized investment advice in those states and international jurisdictions where we are registered/filed notice or otherwise excluded or exempted from registration requirements. The purpose of this web site is only for information distribution regarding BWM products and services as well as general investor education. All information is provided for informational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.

 

Form ADV   |  Form CRS

© 2021 Bernhardt Wealth Management, Inc.. All rights reserved.

Website Design For Financial Services Professionals