Recruiting expert Ari Wasserman answered this mailbag question:
"If you think of college football programs as stocks — not just for this year, but for the next 2-5 years — what programs are you buying and selling? — Mark C.
My face lit up when I read this question, not only because a large portion of my free time is spent reading about investing but also because this is exactly how I view recruiting. If you look at recruiting classes as a company’s quarterly earnings report, you can get a really nice look at where things are headed. Now in this new age of college football roster construction, a program’s view on NIL and the transfer portal can serve as earnings reports. You read the earnings reports and decide whether you want to invest your hard-earned money into that entity.
Here are a few programs that came to mind.
Georgia — Buy: Georgia is Apple. It is the best company in the world. It prints money and is going to be here for the long term.
Alabama — Buy: Alabama is Amazon. Things have taken quite the hit in recent months, but are you really concerned about things bouncing back? Nick Saban lost the national title and made some comments about Texas A&M that he probably shouldn’t have. Amazon is down big due to worries of inflation and the current economic uncertainties. But are you really not going to buy Amazon when things are bad?
Michigan State — Sell: Michigan State is Target. It’s a reliable shopping place and an integral part of everyone’s Saturday, but the company just missed its Q1 estimates because of negative cash flow, which can be attributed to the current state of the economy and supply chain issues. The CEO also miscalculated the rise in costs, which hit the company’s stock price hard. Sounds a lot like paying a coach $95 million dollars after one solid season. There are concerns with finances and what that means for expectations of performance. Get me out of here.
Tennessee — Good luck. Want a stock that is volatile as hell and has a ton of public interest? Do you like gambling with an equal chance of hitting it big and losing 30 percent in a day? Then Tennessee — GameStop! — is for you. There is nothing more volatile in the market right now, but there also aren’t a lot of stocks that are this fun to track. Tennessee is in an interesting situation right now as it leads the NIL charge. Will it work out? Your temperament as an investor will determine whether you think this is a good buy.
Notre Dame — Buy: I view Notre Dame as an established income stock that you can count on to consistently perform. Let’s say Notre Dame is Coca-Cola. It has been around forever, it is engrained into the fabric of college football and you know what you’re going to get. But with Marcus Freeman at the helm now, there is a chance for Notre Dame to take the step that most of us have written off as impossible. Freeman is about to sign one of the best classes in Notre Dame history and is doing it in a youthful and different way. If Notre Dame can sign a top-five class — and I am predicting it is going to happen in the next few years — this is a stock you’re going to want in your portfolio.
Clemson — Sell: Clemson is Facebook — er, Meta — to me. It was once one of the most reliable companies in investing, but things seem a little dicey right now. Facebook has plummeted in recent months because it showed a decline in its new users for the first time in company history. And as it transformed to Meta, the earnings report call seemed to lack the type of direction you’d expect from a company that is trying to change the world through the metaverse. Does that not sound like Clemson? The Tigers were once on top of the world, but when you hear how Dabo Swinney speaks about NIL and the transfer portal, are you really going to buy that stock? Like Meta, maybe Clemson will be successful in the long run. It has a history of innovation and success. But in reality, you’re probably more comfortable moving your money into a different security.
Ohio State — Buy: Ohio State is an SP 500 ETF. I buy some with every paycheck because it’s something I want to hold until I’m retired. It may not outperform some of the sexiest stocks on an annual basis, but sometimes it will — much like when the Buckeyes win the national title. At the very least, you know it’s going to be in the College Football Playoff discussion. Even the bad years are good years for returns given the Buckeyes have had only one losing season in the last 20 years. Over time — through the good years and the bad years — it’s going to prop up your portfolio, regardless of who the coach is. In 30 years, you know the Buckeyes are still going to be there. They are a program that has never slipped into a prolonged era of mediocrity.
USC — Hold: If this question was asked right after the Lincoln Riley hire, I’d have told you to buy. But now Riley’s presence — along with Caleb Williams — has the Trojans overpriced. If you have it, hold. If you don’t, this isn’t where you want to buy in. USC is priced as though it has already been to the College Football Playoff. It reminds me of Tesla. You expect good things to come from it long-term, and in theory, it could change the world, but the stock price is reflected on hypothetical future innovation and not what the company is actually doing right now. Tesla is a technology company that is using our driving patterns to create autonomous driving? Great. But right now, all I see is a car company that is struggling with infrastructure and deliveries. Is it an $800 billion company? It has $3 million in market cap per vehicle sold. Ford has about $37,000. Does that seem right? Maybe one day it will. But I’m not buying it right now at those levels. If you got in early and believe with all of your heart it is going to change the world, great. Hold it and hope you’re right, much like I am with USC."
"If you think of college football programs as stocks — not just for this year, but for the next 2-5 years — what programs are you buying and selling? — Mark C.
My face lit up when I read this question, not only because a large portion of my free time is spent reading about investing but also because this is exactly how I view recruiting. If you look at recruiting classes as a company’s quarterly earnings report, you can get a really nice look at where things are headed. Now in this new age of college football roster construction, a program’s view on NIL and the transfer portal can serve as earnings reports. You read the earnings reports and decide whether you want to invest your hard-earned money into that entity.
Here are a few programs that came to mind.
Georgia — Buy: Georgia is Apple. It is the best company in the world. It prints money and is going to be here for the long term.
Alabama — Buy: Alabama is Amazon. Things have taken quite the hit in recent months, but are you really concerned about things bouncing back? Nick Saban lost the national title and made some comments about Texas A&M that he probably shouldn’t have. Amazon is down big due to worries of inflation and the current economic uncertainties. But are you really not going to buy Amazon when things are bad?
Michigan State — Sell: Michigan State is Target. It’s a reliable shopping place and an integral part of everyone’s Saturday, but the company just missed its Q1 estimates because of negative cash flow, which can be attributed to the current state of the economy and supply chain issues. The CEO also miscalculated the rise in costs, which hit the company’s stock price hard. Sounds a lot like paying a coach $95 million dollars after one solid season. There are concerns with finances and what that means for expectations of performance. Get me out of here.
Tennessee — Good luck. Want a stock that is volatile as hell and has a ton of public interest? Do you like gambling with an equal chance of hitting it big and losing 30 percent in a day? Then Tennessee — GameStop! — is for you. There is nothing more volatile in the market right now, but there also aren’t a lot of stocks that are this fun to track. Tennessee is in an interesting situation right now as it leads the NIL charge. Will it work out? Your temperament as an investor will determine whether you think this is a good buy.
Notre Dame — Buy: I view Notre Dame as an established income stock that you can count on to consistently perform. Let’s say Notre Dame is Coca-Cola. It has been around forever, it is engrained into the fabric of college football and you know what you’re going to get. But with Marcus Freeman at the helm now, there is a chance for Notre Dame to take the step that most of us have written off as impossible. Freeman is about to sign one of the best classes in Notre Dame history and is doing it in a youthful and different way. If Notre Dame can sign a top-five class — and I am predicting it is going to happen in the next few years — this is a stock you’re going to want in your portfolio.
Clemson — Sell: Clemson is Facebook — er, Meta — to me. It was once one of the most reliable companies in investing, but things seem a little dicey right now. Facebook has plummeted in recent months because it showed a decline in its new users for the first time in company history. And as it transformed to Meta, the earnings report call seemed to lack the type of direction you’d expect from a company that is trying to change the world through the metaverse. Does that not sound like Clemson? The Tigers were once on top of the world, but when you hear how Dabo Swinney speaks about NIL and the transfer portal, are you really going to buy that stock? Like Meta, maybe Clemson will be successful in the long run. It has a history of innovation and success. But in reality, you’re probably more comfortable moving your money into a different security.
Ohio State — Buy: Ohio State is an SP 500 ETF. I buy some with every paycheck because it’s something I want to hold until I’m retired. It may not outperform some of the sexiest stocks on an annual basis, but sometimes it will — much like when the Buckeyes win the national title. At the very least, you know it’s going to be in the College Football Playoff discussion. Even the bad years are good years for returns given the Buckeyes have had only one losing season in the last 20 years. Over time — through the good years and the bad years — it’s going to prop up your portfolio, regardless of who the coach is. In 30 years, you know the Buckeyes are still going to be there. They are a program that has never slipped into a prolonged era of mediocrity.
USC — Hold: If this question was asked right after the Lincoln Riley hire, I’d have told you to buy. But now Riley’s presence — along with Caleb Williams — has the Trojans overpriced. If you have it, hold. If you don’t, this isn’t where you want to buy in. USC is priced as though it has already been to the College Football Playoff. It reminds me of Tesla. You expect good things to come from it long-term, and in theory, it could change the world, but the stock price is reflected on hypothetical future innovation and not what the company is actually doing right now. Tesla is a technology company that is using our driving patterns to create autonomous driving? Great. But right now, all I see is a car company that is struggling with infrastructure and deliveries. Is it an $800 billion company? It has $3 million in market cap per vehicle sold. Ford has about $37,000. Does that seem right? Maybe one day it will. But I’m not buying it right now at those levels. If you got in early and believe with all of your heart it is going to change the world, great. Hold it and hope you’re right, much like I am with USC."
