What You Love Most About Fantasy Football Doesn’t End During Offseason

Sure, watching two teams play that you don’t care about just to see how your DFS picks perform is still fun, but it was the “analytics in motion” that compelled you to want to play DFS in the first place. It was discovering if your intuition was validated or invalidated that got you excited each week to play, up early Sunday morning like a kid on Christmas (you know who you are). And finally, it was the fact that you liked winning money every week, you loved the challenge of being right, and your chance to boast about how good you are when you go back to work on Monday. Yes, this is DFS, and this is “analytics in motion.”

But if you’re like us, you may not get the same enthusiasm about daily fantasy basketball, or hockey, or eSports. So what to do then? Well, we had this same problem a year ago, and realized that it was the challenge of DFS as a whole that kept us intrigued for more. So what did we do? We created an app for our second favorite category: trading stocks. We had seen that there wasn’t a daily/weekly fantasy stock trading game, and that boring companies had failed at making paper trading into a fantasy contest because they didn’t introduce the same concepts found in DFS. So instead, staying true to our love of DFS, we built a fantasy stock trading game that specifically models as many characteristics of fantasy football as possible.

So what is this game, you ask? It’s a gaming platform called TradeJester, with one-week long fantasy contests that focus on specific elements of trading that are fun, simple, and use strategy and analytics to make it an exciting player versus player experience. Our first game, the Earnings Game, involves a one week contest in which you pick 6 stocks from a list that are reporting earnings that week to buy long or sell short. This makes it exciting because it minimizes the other variables that normally drive stock price movement, and you’re using data analytics to “pick the best players” that will do what you think they should do, just like in football. You also have a limited portfolio value (salary cap), so you have to spend wisely, choosing how much weight to assign to each stock, similar to what you would do in DFS. And finally, you have to pick a strategy to use that makes sense for your play style: Do I go for a RB focus, or receiver focus? Do I try the ‘pick everyone from the same team if they’re going to dominate the other team’ strategy? Do I go with the consensus picks from the analysts? The same mechanics can be applied to stocks in the Earnings Game. So what are the strategies for playing to win, and how is that analogous to football?

The first strategy is what we call the Sector Focus, meaning you pick stocks specifically from one or two sectors of the economy. There are 10 sectors to choose from, and think of them as receivers/backs. You could spread the ball around among multiple receivers (picking stocks from multiple sectors), or you may just focus on going to your go-to backs (Zeke Elliot for you Dallas fans), meaning you consistently make your picks from one sector. The best part is we use descriptive and predictive analytics within our app to tell you what sectors you’re best at, so the more you play, the better you know.

Filters

The second strategy is what we call the Consensus Focus. This is like reading the defense and figuring out what play to call based on what you see. Here, we give you the Wall Street consensus on what they think the stock is going to do. If you know anything about Wall Street, like most football commentators on TV, half the time they’re wrong, and the other half they pretend they’re right. In this case, if Wall Street pegs a stock as Outperform, but the stock has missed earnings the last 4 quarters, you might think, I am going to call their bluff and short this stock. After all, it’s like reading a defense, but more important, doing it correctly. So you might use the Wall Street analysts’ consensus for each stock as a starting point to decide what to do.

Earnings History

The final strategy is what we call the Volatility Focus. This is like deciding “do I want to call a play to throw the long ball, even if it is riskier, but can lead to a touchdown, or do I want to play it safe, and just run the ball with Zeke?” (which the Cowboys should have probably thought about doing more often against Green Bay, but I digress…). Here, we give you stocks that are sorted by which will move the most, and which will move the least. You decide: do I want to go for the long bomb play with this stock but risk the interception? Or do I pick a stock that’s like a draw play, that is a safe bet.

Volatility Filter

After each week, we give you analytics back within the app that tell you how well you’re executing any of these strategies, so you know how to adjust, or if you need to double down.

Player Progress

So play TradeJester this offseason and put your intuition and strategy skills to the test. Unlike football season, earnings season never ends. Download the app for free on iOS or Android, or check out our website at TradeJester.com.

When in doubt, go Long

Image result for go long

Something we get asked very frequently by our players is simply, “what is the best way to win at the Earnings Game?” Some of our players have figured out winning strategies, and that’s why we have several names that you will see at the top of the standings week in and week out. For those of you that are new to the game and looking to understand what your best strategy is, we’re here to help.

The first thing that we suggest you do is take a look at our new “How to Win” page on TradeJester.com where we introduce a very basic 3-step process for making your picks. In this process we recommend you first choose your strategy, which is in essence choosing which sort/filter tool you want to focus on. Once you’ve done that, use the earnings history to decide if you want to go long or short, and then use the price trend on the Analyze tab to decide how confident you are that the stock will behave the way you expect, using this to decide which weights to use.

If you’re like most people that have limited experience with stocks, you probably still have a lot of uncertainty about how to approach your decision-making in the Earnings Game. Here is a hint based on what the statistics tell us:

Over the last 4 quarters of earnings reports from S&P companies, over 65.5% of companies BEAT their earnings estimates. This is why we say, “when in doubt, go long.” Most companies beat their earnings estimates, because that is job #1 for virtually all CEOs. They will set the earnings estimate at a level that they project to be relatively easy to beat while still showing reasonable growth.  Certainly this isn’t a sure thing; 26% of companies MISS their earnings target (the remaining 8.5% meet expectations). And while beating earnings doesn’t ensure that the company’s stock price will increase, it does make it far more likely. In fact, even if the company’s stock price is solidly trending down, if they beat earnings, there’s a good chance the stock price will see a small increase, or at least see its price flatten, for that week. Always remember, the Earnings Game is a one-week game centered around earnings, so you only truly care about how the stock responds in regards to its earnings report; don’t overvalue the stock’s long-term performance.

Here’s the breakdown of the average of S&P companies’ last 4 earnings reports, prior to this week:

Earnings Reports 2017-02-16.png

This is what this data tells us:

  1. Two-thirds of stocks beat their earnings estimate each quarter. If you’re betting on the stock to decrease in value, you’re betting against the odds.
  2. The overall S&P’s ability to beat their earnings estimate is very consistent. At least from this limited sample size, earnings reports do not appear to be cyclical as a whole, and appears to be immune to overall market conditions such as the recent surge since the election.
  3. If a stock has missed its earnings estimate 2 or more times in the last 4 quarters, that should be a major red flag and can be a stock that you can seriously consider shorting.

The moral of the story: The wise move is to focus on stocks to pick long when you are building your portfolio, because the odds are in your favor if you do so. Picking short can be lucrative if you’re correct, but you need to be sure you have a solid reasoning when you take that chance.

Good luck, and happy trading!

Football season is over. Earnings season never ends.

Why do you play fantasy football? Sure, you love the sport, and yeah, it gives you a way to take your enjoyment of the game up a notch, especially when two teams you don’t really care about are playing. We get it, we play too. But we know there are other reasons you play, too. You love the competition. You love the process of selecting players, building your roster and fielding your team each week because it gives you a chance to prove that you’re the smartest player in the league. You love that the more work you do on preparing for game day, the better your chances of winning. That hard work pays off. Heck, if you’re like us, you love crunching the numbers, figuring out the odds and finding that one gem that no one else saw coming, then riding it to victory. Oh, and we know you love one last thing: winning money.

Football season is over. If you’re a typical fantasy football player, it’s been over since the final whistle of week 16 or 17 of the regular season. But now there aren’t any games left at all, and you’re left with an empty space in your life, just like we are. Now is the time to take all those things you love about fantasy football – the challenge, the competition, the number-crunching, the glory of victory – and discover them in a new game: TradeJester. TradeJester is a free app for iOS, Android, and on the web that offers fantasy stock trading contests that in many ways mirror the experience of fantasy football. Each week, you choose your starting lineup of 6 stocks out of those that have quarterly earnings reports due out that week (usually, this is around 200 to choose from). Your goal is simple: have the best portfolio performance, based on stock price movement, from those six stocks out of anyone in the contest. Just like daily fantasy football, contests have a small buy-in (as little as $5), last one week, and have a prize pool based on the number of players. But unlike real stock trading where you have to risk hundreds or thousands of dollars, with TradeJester, all you have at stake is the contest buy-in.

Right now I’m sure you’re saying to yourself, “I don’t know anything about stocks, but I know a lot about football. I’d be at a huge disadvantage, right?” Let me ask you this: when you started playing fantasy football for the first time, be it this year or 15 or more years ago, did you immediately know the best strategies and choices to make, or did you rely on expert advice and recommendations to help you out along the way? TradeJester is the same way. You, and many of our users, will be coming in with very little or even no previous knowledge of the stock market, and that’s ok. In fact, that’s the way we prefer it! TradeJester is designed to make the process of picking stocks each week as simple as possible. But don’t confuse simplicity with mindlessness; you will still be given a lot of different information off of which to base your picks, so you will know why you picked the stocks you picked. Then, when the week is over (each TradeJester contest lasts just one week, just like the daily fantasy football games you’re accustomed to), you can review the results and you immediately have a means to learn about what worked and what didn’t, and by your second week, you can start developing a strategy. Just as it did in fantasy football, each week your strategy will become more sophisticated and your odds of winning will become greater and greater.

Here’s the best part: there’s much more you can take away from playing TradeJester than just the chance to win some money in fantasy contests. You will also be developing knowledge, experience and most importantly, a viable strategy that you can use to trade the real stock market. Our data shows that TradeJester users – regardless of their background or previous stock trading experience – consistently improve upon their stock picks to the point that by the time you’ve played for 6 weeks or more, your overall portfolio gain has an 80% chance of being positive and the average return is over 6% (on simulated money). That means that if these users had invested their own money in the picks they made for the contests, they would have made a 6% return in six weeks, something most hedge funds only dream about. Does fantasy football teach you a skill that’s that powerful in the real world?

We’re not asking you to abandon fantasy football or any other fantasy sport. In fact, we encourage participation in those games as well because we know as well as you just how entertaining they can be. What we’re suggesting is that TradeJester can be the game you use to scratch that itch during the offseason, or during slow weeks, or even if you’re looking for a way to learn more about trading stocks in general. So next time you hear on the news that some big company is reporting earnings this week, think “Game on!”