Well 3 - Playing Favourites is a Losing Strategy

I am, and have been, an avid supporter of rugby league (NRL) for 55 years. 

My team, the Brisbane Broncos, entered the national competition in 1987 and have amassed the largest member base of the 18 clubs. They have won 6 premierships including a dominent run in the late 1990s and been runner up twice. They have finished last (called the wooden spoon) on only one occasion - 2020. They bounced back to be runner-up in 2023 heartbreakingly losing the final after leading for 60 of the 80 minutes.  

It still hurts:) 

So how does this relate to Well 3?

After thinking about my support for the Broncos, it doesn't really make sense. It is purely emotional and most likely based simply on location. The logic extends to individual players - I can hate a player one year and love them the next because they are now in my team. I can then hate that player temporarily during the State of Origin because they play for the Broncos, but also NSW. Using logic, if I support the Broncos, then I have to support Queensland when we play New South Wales. Go figure......

Supporting one team is a loser's game. Basically you fail most years and even to win most games in a season. The closer you get to the finals the bigger chance you have of losing and then being heartbroken while watching another team win. In 2015, The Broncos lost in extra time. Another kick in the guts!

Even the best teams of the past decade or two lose more than they win. Most recently the happiest supporters would be Penrith Panthers who made the final in 2020 (to Melbourne Storm) only to lose, but then go on the win the next 4 on the trot including defeating the Broncos in 2023 and in 2024 exacting their revenge on Melbourne. This yeat though, Panthers are struggling. Mean reversion always lurks for the unsuspecting.

In statistical terms, being a supporter of one club to the exclusion of all others is a dumb idea. You are simply setting yourself up for steady bouts of disappointment including losing the games weekly or losing in the finals or the ultimate pain of losing the grand final. As they say, no-one remembers who got the silver.

If you replace teams with stocks then you can see that selecting individuals stocks is really not a great numbers game.

Basic maths says you are bound to pick a losing stock more than a winning stock. Or that your winner looks good for a while and then you fail to cash in and "lose in the finals". 

Whichever way you look at it, it makes more sense to simply enjoy the game without supporting one team. That way you don't care who wins or loses but you still get to enjoy the wins and the losses of all the teams. 

In investing terms, you select a range of ETFs (they're safer) and then simply sit back and rebalance the winners to the losers. Don't play favourites. In markets like in footy, there is mean reversion and so long as you don't play favourites you will come out on top every time.