Date: December 8, 2015
Is the College Football Playoff Selection System Fair
The College Football Playoffs are set as the selection committee has determined the four teams that will battle for the national championship.
While most agree with the committee and the top four teams, there are some out there discussing whether a team like Oklahoma deserves to be in the playoffs over defending champ Ohio State. This is because Oklahoma took a loss to low-ranked Texas earlier in the season while Ohio State's lone loss came at the hands of third-ranked Michigan State.
That makes for great debate amongst fans of college football.
A topic that can't be debated is the distribution of the money that the bowls and the college football playoffs generate. That's mostly set in stone and the power conferences are obviously taking home the chunk. As much as that is accepted, each of the top conferences want to get their "fair" slice of the pie. In 2014, the Big 12 conference was on the outside looking in as Baylor and TCU were #5 and #6 respectively.
As we went into the final weekend, the only team in the top 4 that didn't have a game was Oklahoma from the Big 12. Given that, they were also the only team that was truly safe in regards to getting into the college football playoffs. While we're not here to argue whether Oklahoma belongs in the top four or not, it begs the question, would the committee have removed the Big 12 out of the top four again under any circumstance? That would essentially have kept the Big 12 out of the big money game in consecutive years and possibly opened the door to the Big Ten getting a double payday.
ACC: $6 Million*; Big 12: $6 Million*; Big Ten: $6 Million*; SEC: $6 Million*
With Ohio State:
ACC: $6 Million*; Big Ten: $12 Million*; Big 12 $0 (not including the $ that the Big 12 would receive for participating in non-playoff bowls); SEC: $6 Million*
The above figures don't include a $2.08 million payout* (sent to the conferences) to cover expenses per team, per game. Having two teams from the same conference in the playoff mix would mean a huge payout for that particular conference. This is especially true if those teams win in the semifinals and face-off in the national championship game.
Given the fact that the revenue is distributed in this manner, do you think two teams from the same conference will ever make the college football playoffs during the same season?
While it's certainly not a conspiracy, it's good food for thought.
High Roller Fund
6S Alternatives LLC
Date: December 15, 2015
College Football vs. S&P 500
In Poor Charlie's Almanac, which is a great book in case you haven't had a chance to read it, there are many great sayings. A quote that I find very enlightening came from Warren Buffett which states:
"If we have a strength, it is in recognizing when we are operating well within our circle of competence and when we are approaching the perimeter."
That quote mimics another saying by Thomas Watson Sr., the founder of IBM: "I'm no genius. I'm smart in spots, and I stay around those spots."
At 6S Alternatives, we have a saying as well, "Trust in your data." That data is what we took into our approach to investing in college football this season. Similarly, as we did with our MLB results, we used the S&P 500 as an investment comparison.
Below are the results:
Comparison Timeframe: September 1, 2015 to November 30, 2015
College Football ROI: +47.0%*
S&P 500 ROI: +5.58%**
Both investments were winners during this timeframe and teaches a valuable lesson mentioned by Charlie Munger:
"Good ideas are a wonderful way to suffer if you overdo them."
What good ideas are you overdoing as you enter 2016?
High Roller Fund
*College football returns only. Returns are calculated based on 2% bankroll risk per play.
**Returns are calculated based on opening price on September 1, 2015 to closing price on November 30, 2015 (source: etrade.com)
When Six Sigma meets Alternative Investing , a multi-strategy alternative investment opportunity is born..
Investing involves risk. Investors should consider the objectives, risks, and expenses before participating in the High Roller Fund.