It is that time of year again. More proof of a post-pandemic “back to normal.” The NCAA men’s basketball tournament is back.
On Sunday, March 12th, the NCAA selection committee will announce the field. For the 2023 NCAA Men’s Basketball tournament.
Ready or not, “March Madness” has begun.
The tournament includes 68 teams. To compete in the national championship game on Monday, April 3rd. Virtual office pools and bracket challenges. The number one e-mail and text message topic over the next three weeks.
Since 1979, most casual of college basketball fans have relied on the seeding. To improve their tournament team picks. Seeding allows the NCAA to make sure the strongest teams play more games. And do not end up meeting each other too early in the tournament.
Think about the money involved! The NCAA does not want to threaten television ratings and advertising revenues.
A team with a high seed or ranking is the stronger team. Based upon qualitative and quantitative evaluations. That team often has more talent and better coaching than the lower-ranked teams.
Past performance has no guaranteed future success. For all the high-seeded teams. But it is a good starting point for the average fan’s tournament bracket picks.
The NCAA committee has its own proprietary system for ranking teams. The final seeding is based on head-to-head games. And season performance.
Do you realize each of your 401(k) mutual funds can be seeded or ranked by investment performance?
The process of ranking mutual fund investment performance involves Relative Strength.
Relative Strength ranking includes investment performance of a mutual fund. Versus the stock market benchmarks. Another part includes investment performance of a mutual fund. Versus a peer group mutual funds in the same asset class.
The more relative strength head-to-head “buy” signals generated, the higher the “seeding.” Or ranking on a company 401(k) mutual fund menu.
Like the NCAA men’s basketball tournament. History shows top ranked mutual funds perform better than lower ranked ones. In any head-to-head competition.
Your company 401(k) retirement plan menu is a fixed universe of mutual funds. Relative Strength rankings help you identify the strongest mutual fund options to own. In any given stock market environment.
Mutual fund relative strength rankings answer that age-old individual 401(k) investor question. “What do I buy?”
Diversification should also be part of your 401(k) investment management strategy. Why not diversify your 401(k) among the handful of highest ranked mutual funds available?
It might be an improvement on your current “buy-and-hope” investment management strategy.
Admit it. You will spend time filling out your tournament brackets. More time that you have spent watching your 401(k) account over the last few months.
Independent, third-party investment advisors can provide Relative Strength rankings. Of the mutual funds on any default 401(k) menu. If you do not have access to an investment advisor with that level of expertise, I can help.
Is Charles Schwab is your retirement plan provider? If so, I can send you the mutual fund relative strength ranking for your company 401(k) menu. See my contact information listed below.
Each year there are Cinderella teams and tournament upsets. But the long-term statistical odds are stacked in favor of the higher seeded teams. Because they win the majority of the men’s NCAA tournament games.
Upsets will not preserve and grow your retirement nest egg as much as you need. When you pick your company 401(k) retirement plan mutual funds, stay with the highest seeds.
Ric Lager
Lager & Company, Inc.
I have spent the last several years trying to figure out the best way to share my 401(k) advice content. I have tried Twitter, Facebook, company web site, and LinkedIn Groups. I now realize nothing beats a well-crafted newsletter delivered to your inbox once a week. Sign-up here.
If you like the content, hit reply, and start a conversation. I can help you figure out your default 401(k) mutual fund menu.
