Are You an All-Star Investor?

The 88th Major League Baseball All-Star Game will be played on Tuesday in Miami honoring the game’s greatest players.   The all-star game has included perennial legends like Hank Aaron, Willie Mays and Stan Musial each having played in twenty-four all-star games.

Newcomers also make an impression on the game.   This year MLB has two young stars lighting up the score board; Aaron Judge of the New York Yankees and Cody Bellinger of the Los Angeles Dodgers.   Aaron Judge currently has thirty homeruns and set a record for Yankee rookies for the most home runs before the all-star break.   Cody Bellinger has twenty-four homeruns and is on pace to shatter the Dodger record set by Mike Piazza’s in 1993.

The baseball all-star game is the best sports spectacular of all the all-star games held by the major sports.  The game is comparable to the regular season format and it’s competitive.  If you need proof, watch the YouTube video of Pete Rose running over Ray Fosse in the 1970 All-Star Game.

Despite the great talents of these players they still must work at their craft.    Ichirio is in relentless pursuit of perfection on the baseball field.  He spends hours stretching and swinging and according to C.C. Sabathia, Ichirio only takes off two days out of the year, the day after the season ends and Christmas.[1]

All-Stars have down days too.  As great as these players are, they still strike out, make errors and throw wild pitches.  However, they continue to play through the dark days knowing the odds of success will be in their favor.  A strong work ethic, constant practice, and a positive outlook will soon return them to the spotlight.

Are you an investor all-star?  Do you have what it takes to be among the all-time investor greats?  I believe you do and with a few simple tweaks to your investing routine you can be an all-star investor.  Let’s look at a few ideas to help keep you in the investing game.

  • Plan. The great managers of the game of baseball all have a plan.  Tommy Lasorda, Walter Alston, and Joe Torre had a plan for each game.  Like these managers, you too should have your own plan.  A well-constructed financial plan will help you become an all-star investor.  Your plan will drive home your hopes, dreams and fears.
  • Line-Up. Casey Stengal once said, “Good pitching will always stop good hitting and vice versa.”  A strong line up is tough to beat.  The 1927 Yankees are considered by many to be the best baseball team of all time.  Their “Murderer’s Row” consisted of Earle Combs, Babe Ruth, Lou Gehrig and Tony Lazzeri all of whom are in the Baseball Hall of Fame.[2]   A strong line up of low cost, diversified index funds will keep you in the game for a long time and produce winning results.
  • Routine. Baseball players are superstitious.  Wade Boggs ate chicken before every baseball game.  To increase your odds of success you should create a routine.  Two routines I recommend are dollar cost averaging and rebalancing.  Dollar cost averaging consists of investing the same dollar amount each month into an investment.   If you participate in your company sponsored retirement, you’re dollar cost averaging every pay period.    Following this strategy with your investment accounts will pay big league dividends.   Rebalancing your portfolio will reduce your risk and keep your original asset allocation intact.  I recommend rebalancing once per year, typically in January.
  • Play. “Progress always involves risks. You can’t steal second base and keep your foot on first base”, said Frederick B. Wilcox.  To be an all-star investor you need to own stocks.   Stocks are perpetual all-stars and have outperformed bonds and cash by a wide margin.   A dollar invested in the S&P 500 in 1926 is worth $6,031 today.  This same dollar invested in a one-month US Treasury Bill is worth $21![3]
  • Review. Baseball players watch tape on opposing players and themselves to look for clues on how to gain an advantage.   Reviewing your accounts quarterly will keep you in peak form.  As you review your accounts look at winners and losers.  Do you need to make any adjustments or changes?   A quarterly review is an opportunity to make sure your investments are in line with your financial game plan.
  • Celebrate. Derek Jeter’s last game at Yankee Stadium was epic.  The Yankees and Orioles were tied in the bottom of the ninth when Jeter came to the plate.  To put a punctuation point on his fabled career he had the game winning hit and everyone in Yankee stadium erupted in applause and celebration.   As you gain success as an investor take some time to enjoy the fruits of your labor.

Get your game on and become an investing all-star.  I know you can do it!   Your talent mixed with discipline, practice and patience will give you major league results!  Batter up!

I can do all this through him who gives me strength. ~ Philippians 4:13

“Ruth, Gehrig, DiMaggio, Mantle … Costanza?!” ~ Jerry Seinfeld

Bill Parrott is the President and CEO of Parrot Wealth Management and is a big fan of Major League Baseball.  For more information on financial planning and investment management, please visit www.parrottwealth.com.

July 8, 2017

Note. Your investment results may differ than those highlighted in this post.

 

[1] https://www.nytimes.com/2015/10/04/sports/baseball/ichiro-suzuki-aiming-at-age-50-but-first-3000-hits.html?mcubz=1, David Waldstein, October 3, 2015.

[2] https://www.fold3.com/page/629784704_1927_new_york_yankees_murderers_row#description

[3] Dimensional Fund Advisors Matrix Book 2017.

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