Investing in individual companies is difficult. Individuals who can do this consistently few and far between. Nearly every study of mutual fund performance shows that after fees stock-picking is a losing proposition. Then why would you think that “investing” in individual athletes would turn out much better? In any event, Fantex wants to find out.
Thankfully a number of other blogger and writers have already taken a crack at the idea of trading shares on an athlete’s career earnings.
- How an investment is Fantex is the “worst of all possible worlds.” (Felix Salmon)
- Why you should pass on this “IPO.” (Josh Brown)
- On the return of the “tracking stock.” (Quartz, FT)
- The “offering” is arcane and dilutive. (IndexUniverse)
- These issues are small and will be illiquid. (Time)
- Conflicts of interest abound. (Time)
- And the risk of injury is very real. (Dealbook)
- There is however one way in which a Fantex-like system would work. (Adam Warner)
The bottom line is just because you can invest in something doesn’t mean you should. Life’s too short to spend your time worrying about how an athlete performs on (and off) the field. For the vast majority of investors the sidelines is the place to be when it comes to novel structures built on an athlete’s knees.
Update: Said more bluntly Kevin Roose at NYMag says we are back in the “age of bullsh*t” investments.” Also Aswath Damodaran at Musings on Markets goes through a valuation exercise on Fantex’s offering.