By Rick Aristotle Munarriz

Filed under: JC Penney, Nokia, Investing Basics, Investing

It’s March Madness, that happy time of year when hoops fans are distracted and brackets are falling apart: Do you know where your top seeds are?

In a valiant attempt to stick to advancing the cause of financial education (at a time when my alma mater University of Miami Hurricanes have a chance of actually making some noise this tournament) I figured I would tie the two together by showing how March Madness can enrich you, even if you don’t have any skin in the game.

So, as the NCAA basketball tourney plays on, here are three takeaways for investors.

1. Past performance is no guarantee of future results.

There will always be upsets as the top 64 teams vie to run the table and win the tournament. The first round has already seen 14-seed Harvard upset 3-seed New Mexico, and top seed Gonzaga almost lose to Southern University.

The same thing holds true for investments.

Mutual fund ads always feature the disclaimer that past performance is no guarantee of future results. Believe it. Sure, odds are good that a market-thumping fund manager will continue to beat the market, just as the top seeds will always be the favorites to advance. But there’s a reason the games are played.

Take Apple (AAPL), for example. You won’t find too many companies as dynamic. It breathed new life into portable media players in 2001. It went on to define the smartphone movement with the first iPhone in 2007. Two years later it rolled out the iPad at a time when consumers didn’t think they needed a tablet.

Today? Things haven’t been as rosy for Apple, as margins have shrunk and global market tastes have shifted to cheaper alternatives. The stock has surrendered 35 percent of its value since the iPhone 5 hit the market. After years of growth, analysts see flat earnings at Apple this fiscal year.

Bottom line: There’s no such thing as a sure thing. For years it seemed like Apple could do no wrong. But global market tastes have shifted to cheaper alternatives. Apple’s margins are shrinking and the competition is getting fierce. Remember, when you’re No. 1 the game is always on. It’s never safe to put your guard down and get complacent.

2. Seasoned leadership is a vital asset.

How about those Hurricanes? By the time you read this, “the U” may already be out of the tournament, but it was a pretty remarkable season for the University of Miami.

The team has never been a basketball powerhouse, yet it emerged this year to win the ACC for the first time. It had to defeat Duke and UNC to make it happen — a pretty impressive feat. And there’s one big reason behind that success. Four …read more
Source: FULL ARTICLE at DailyFinance