Four value picks to target in your draft
Despite being a philosophy major with zero experience in the field, I managed to land an internship at a prestigious hedge fund during the summer of my junior year. Even more impossibly, I was one of only three (out of 10) who were invited back the following year. When one of the other interns asked how I had been able to catch on so quickly, I told him I owed all of my success to fantasy football.
Carefully reading press releases, creating interactive models and graphs, building out projections, and using advanced formulas and metrics were all things I was already doing for my upcoming draft. I would notice more similarities every day, like how different asset classes (positions) have different risk portfolios (bust rates). How a diversified portfolio is important in investing, just as having too many players on the same team in your lineup increases your overall risk. How a stock with a high forward P/E ratio might be similar to a high-upside dynasty stash.
One investment term that always stuck with me, is “arbitrage.” According to Investopedia, arbitrage is “a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms.” That is exactly what I’m going to be doing here – looking for market inefficiencies, or examples where players are priced cheaper by Average Draft Position (ADP) but are still likely to produce at a similar rate to their more expensive counterparts.
Swap Matt Ryan (QB7, Round 7.04) for Cam Newton (QB15, Round 10.09)
Newton has outperformed Ryan throughout his entire career, yet, for some reason, Ryan is being drafted three rounds earlier. Over the past five seasons, Ryan has finished as the QB7, QB11, QB7, QB8, and QB9, respectively. While he does appear to be a relatively safe pick, you’d still be buying him at his historical ceiling.