What March Madness Can Teach Us About Picking Stocks

Every March, people fall in love with the same story.

Somebody takes a bunch of big swings, nails a few wild upsets, and suddenly looks like a genius.

That story gets all the attention.

But there is another story happening at the same time. A lot of other people took those same kinds of swings, got cute with their picks, and were basically done before the weekend.

That is not just a March Madness lesson. That is an investing lesson too.

First, let's talk about how brutal the odds actually are

And here is the part that makes March Madness feel especially cruel: after the first day of the NCAA tournament, an average of 99.98% of ESPN brackets over the past five tournaments were already no longer perfect.

Read that again. After one day.

Not after the first round. Not after the Sweet 16. After the first day. And not even all the first-round games have been played. In a typical year, Thursday's opening slate covers just 25.4% of the 63 main-bracket games.

So before the first day of the opening round has even finished, the overwhelming majority of brackets are already missing at least one game. The automated ones. The AI-assisted ones. The ones built with dart throws. The ones somebody spent three hours "carefully researching." They are busted. They are not perfect.

Last year, the last publicly identified perfect men's ESPN bracket was not attached to some famous genius. It was just an ESPN bracket named: "#RoadToPerfection" For a brief moment, that bracket was the story. It had that Andy Warhol kind of 15 minutes of fame. Then Kentucky beat TCU in the round of 32 and the bracket busted. This was the longest perfect run since 2019.

That is the point. For one shining moment, somebody can look brilliant. Then the tournament keeps going. The games keep testing the picks. And a story that looked special on Friday can feel forgotten by Sunday.

You know how hard it is to win a huge men's March Madness bracket challenge. Using ESPN's 2025 field of 24.4 million completed brackets as a proxy for a giant public contest, it is about 12 times harder to win the Powerball jackpot.

The Powerball detour — and why people keep playing anyway

Speaking of long shots, let's talk about the lottery for a second. Because I think the same thing is happening there.

Most people are not really buying a spreadsheet when they buy a Powerball ticket. They are buying a feeling. Hope, anticipation, fantasy, conversation, and a temporary invitation to imagine a very different life.

Researchers have found that lottery participation can raise momentary happiness before the drawing, suggesting that people get real utility from the anticipation itself. Other behavioral research suggests people also tend to overestimate tiny probabilities, overweight long-shot outcomes, and sometimes buy tickets simply to avoid the regret of not playing if their numbers would have hit.

For a lot of people, Powerball is not an investment. It is entertainment with a fantasy component. And for me, part of the fun is that I really feel the pull when the numbers get huge. The bigger the jackpot, the easier it is to slip into that little daydream of just maybe and wouldn't it be fun if…

That is fine. But the same psychology — overweighting the long shot, chasing the feeling of the big hit — is exactly what gets investors in trouble.

Is the dream worth four grand? That depends on what you think you are buying. But in a portfolio, the stakes are not six dollars a week. They are your retirement. Your flexibility. Your family's options.

The bracket version of this is pretty simple

Let's say you are in a pool with 25 people, or even 100.

If your goal is to finish near the top, you do not need to invent chaos. You do not need twelve double-digit seeds advancing just so you can say you were bold. You do not need a bracket that makes people stop and stare on Thursday morning.

You need a bracket that is still breathing in the second weekend. Staying in the game longer gives you the chance to be right in the later games that award more points.

Picking one or two smart upsets is different from building your whole bracket around chaos. One approach gives you a chance to separate from the crowd. The other gives you a good chance to be drawing dead before the tournament really gets going.

That is how I think about it. You do not want a bracket that only works if everything weird happens. You want a bracket that can absorb a surprise or two and still be in position.

I think that is the part people miss.

In a bracket pool, the buzz will be about the one person who took great risks and got crazy lucky with their picks. But there are just as many, and probably more, who took big risks and washed out.

We hear about the winner. We do not hear much about the pile of broken brackets underneath that story.

That is very similar to stock picking

A lot of investors say they want strong long-term results. But what they really get tempted by is the feeling of finding the one magical thing before everyone else.

The hot stock. The exciting story. The sector that feels unstoppable. The pick that makes you look smart at dinner.

Sometimes that works. Sometimes somebody really does catch the rocket ship.

But for every person who caught that one big winner, there are plenty of others who concentrated too much, took too much risk, and quietly disappeared from the conversation.

That is survivorship bias.

We notice the lucky winner and ignore the crowded field of people who tried something similar and got hurt.

In brackets, that may cost you an office pool.

In investing, that can cost you years.

So what should you do if you want a good result?

If you want an above-average result, do not build everything around low-probability heroics. Start with a sound structure. Take a few thoughtful risks. Avoid getting knocked out by one bad call.

In a bracket:

• Respect the stronger teams and the basic odds.

• Be selective with upsets instead of collecting them for fun.

• Look for a few spots where the crowd may be too confident.

• Protect your later rounds, because that is where many pools are really decided.

In a portfolio:

• Build around quality and durability, not just excitement.

• Diversify enough that one mistake does not sink the plan.

• Take risk on purpose, not just because something is getting attention.

• Remember that avoiding big losses is one of the best ways to finish ahead.

In both cases, I think the better question is not, "How do I look brilliant?"

It is, "How do I put myself in a good position and stay there?"

The same risk logic that applies to your bracket applies to your portfolio. Slide from low to high risk and watch what happens to both — how your bracket is likely to score against the field, and how much your annual return could swing in either direction depending on how concentrated your investments are.

See how the math plays out as you slide from conservative to aggressive

Here is an example I like

Picture two people heading out in a boat.

One wants to gun the throttle, cut every corner, and show everybody how fast he can go. He might get there first. He also might hit something, take on water, or spend the rest of the day dealing with a mess he created himself.

The other person still wants to make good time. He is not timid. But he reads the water, respects the conditions, and avoids doing something dumb just to feel bold.

That second person may not create the most exciting story in the first five minutes. But over a long stretch, that is usually the person who gets where he wants to go.

Brackets can be like that. Investing can too.

The biggest difference is time

That difference matters more than people think.

A bracket is a short game. It starts, it ends, and you get your result. Real life does not work that way. You are building toward retirement, flexibility, peace of mind, generosity, and all the things you may want to do for the people you care about.

And you do not know exactly how long your money needs to last.

That means the cost of a big investing mistake can be much higher than the cost of a busted bracket.

A busted bracket is annoying. A busted financial plan can limit choices for years.

There is another difference too. In a bracket pool, when it is over, it is over. In life, if things go well, you may be able to share some of that good fortune with your kids and grandkids during your life or pass it along after you are gone. Your money can keep doing good either way.

That changes how I think about risk

If you are building wealth for a real life, not a headline, it makes sense to be thoughtful.

Not timid. Thoughtful.

There is a difference.

Thoughtful investors still take risk. They just try not to take the kind of risk that can knock them so far off course that the plan never really recovers.

If you are grilling for friends, you do not light the whole bag of charcoal with a blowtorch just because you want dinner faster. You build the fire the right way so it lasts and does its job. A portfolio works better with that kind of patience too.

I think that is a good way to look at both brackets and investing. You do not need every pick to be heroic. You do not need every position to be exciting. You need a framework that can hold up.

The goal is not to be famous for a weekend

The goal is to make good decisions, stay in the game, and give yourself enough upside without taking unnecessary damage.

In March Madness, that may mean passing on a few flashy upset picks so your bracket is still alive when the games really matter.

In investing, it may mean building a portfolio that is a little less exciting at cocktail hour, but much more useful over the long run.

That may not create the loudest story. But it often creates the better result.

Good plans. Great adventures.