I came home on Tuesday evening this week to find Mark in a frenzy. The time to draft his fantasy football team had come. Picture this:

He was hoping back and forth between his laptop and tablet making his picks and referring to his research, respectively. He had his “football guru” friend on speaker and for the first time (ever) TSN wasn’t on because the TV was off.

I imagine that every fantasy football owner has a different mentality when it comes to drafting their teams. Some study the details of each player for days, weeks (or even months) before drafting the perfect team. Some may mock a draft of their favourite guys. Some jump on the bandwagon of what others are saying. Some don’t care at all. And others, like Mark, will do their research and engage the opinion and guidance of a “professional” – in this case, his buddy on speaker.

Drafting the right quarterbacks, running backs, wide receivers, tight ends, kickers and defenders came across as a chaotic, overwhelming and interesting scene from my perspective. What’s it all based on? Past performance and potential. That’s my take.

You’ve heard this before: “Past performance does not guarantee future results”.

For many investors, it’s natural to look at historical investment performance returns when setting their expectations about the future. Others exercise what is known in the business as “performance chasing”. As soon as they hear a hot tip they pull their money out of their other investments and pour it into the new object of their affection. One of my favourite sayings is that “tips are for waiters, not for traders”.

It's natural to want to invest in a fund or an investment style that has been successful, but investment returns tend to go in cycles. The pattern of these returns is that a very good year is a hard act to follow and that bad years are often followed by recoveries. Underperforming after being the "next hot thing" is common and should be expected.

One could argue that the same goes for professional football players. The career of the average NFL player tends to be short – 3.3 years in fact. Much like the market, the National Football League is extremely competitive, so players must compete hard to keep their jobs against new players entering the league every year. The injury rate among NFL players is also extremely high and careers often end suddenly when players can no longer perform at a high level – case and point with newcomer Le’Veon Bell, a “hot” running back already dealing with injury issues.

Mark’s drafting strategy is one I would support. He’s done his research, he tends to stay away from the “hot tips” and he sought the expert opinion and support of his football fanatic friend. When it comes to investing, it's important to educate yourself along the way so that you understand the basis of your short-term, mid-term and long-term plan. Working with an investment professional helps you to make sense of things and helps you maintain a strategy that keeps your future objectives in perspective without reacting to short term glitches, like yesterday’s historic 3 hour Nasdaq halt, for example. As the saying goes, “time in the market makes profits, not timing the market”.

Enjoy the weekend.

D.

Dian Chaaban

Investment & Wealth Advisor

Chaaban Wealth Management Group

416.842.4234