Monday, March 14, 2005

Bracketeering | by Jay

While you're cruising along filling out your Irish-less NCAA bracket over the next couple of days, you might want to try to summon the spirit of Warren Buffet to help guide your pencil.

Why Buffet, you ask? Most people know Buffet as a legendary investor, the founder of Berkshire Hathaway, and one of the richest men on earth. But the renowned success of "the Oracle of Omaha" was all derived from a very simple maxim:

“Be brave when others are afraid and afraid when others are brave.”
Stock experts call Buffet's magic touch contrarianism. While conventional, conservative investors play it safe, stay with the flock and only take supposedly "safe" positions, a true Contrarian bucks the trend and goes against the conventional wisdom. When the market's bombed out and confidence is in the dirt, the Contrarian's in there buying everything in sight; and when prices soar into the stratosphere, they're dumping, looking for their next position. Warren Buffet's probably the most famous contrarian in the history of the stock market, consistently turning the herd mentality on its head, and reaping a windfall in the process.

Of course, it isn't as simple as just doing the opposite of what everyone else is doing. It takes a laser-like precision and keen insight to figure out when to swing the Contrarian's sword, and Buffet has a knack for it like no one else. His sixth sense about when it's right to go against the grain is uncanny. (It also helps that he's got a pair the size of cannonballs.)

So how would Buffet approach his NCAA bracket? First, he'd probably try and figure out which way the wind is blowing. ESPN's running a fairly large NCAA challenge on their website, and they're updating a master bracket with the stats from all the individual entries. The result is a fairly good snapshot of the conventional wisdom -- and it reveals a couple of opportunities for some sharp Buffetology.

North Carolina running almost as hot as Illinois for the NC? 3-seed Louisville a 3-2 favorite over top seed Washington in the sweet sixteen? Wake Forest to the Final Four? What would Warren think of these popular picks?

Here's a nice site to give you a little assist. Chris Wheeland's got a seed-by-seed historical analysis on his NCAA Tournament site going back to 1985, and unearths some fascinating tournament minutiae. You probably know that a #1 seed has never lost to a #16, but did you know...

...the tournament has never seen all four #1 seeds advance to the Final Four?

...only five times in 19 tournaments have all four #4 seeds advanced to the second round?

...#8 seeds actually have a losing record to #9 seeds over the past 20 years?

...more #10, #11, and #12 seeds have reached the Sweet Sixteen than have #8 & #9 seeds?

(Lots more revealing analysis from Chris, and his whole site is worth exploring.)

So do your best contrarian impersonation, hold your breath, strap on a pair and buck that trend. Remember, if everyone else in your pool is picking Illinois, that doesn't mean they're right -- just conventional. Be like Buffet, and you might reap the windfall.