One of my favorite things about spring is that every Cincinnati Reds fan suddenly becomes a baseball manager. You hear conversations everywhere about who should bat leadoff, who belongs in the cleanup spot, and whether some rookie who hit .400 in spring training should be in the Opening Day lineup.
It’s part of the fun of baseball. We all love potential.
But if you’ve ever listened to a manager explain why he built a lineup the way he did, you’ll notice something interesting. He’s almost never talking about who had the best game yesterday. He’s thinking about who gives the team the best chance to win over 162 games.
That’s a very different question. Investing works the same way. A lot of people want to build their portfolio around yesterday’s hottest stock or the investment everyone is talking about on television. It’s the financial version of wanting to move a player into the cleanup spot because he hit two home runs on Saturday. Spencer Steer, anyone?
Maybe that’s the right move. Maybe it isn’t. One weekend doesn’t tell you much. Good baseball teams are built with balance. You need speed at the top of the order. You need power in the middle. You need players who can come off the bench when someone gets hurt or falls into a slump. Every position serves a purpose, even if it doesn’t generate the loudest cheers.
A good financial plan isn’t much different. Some investments are there for growth. Others provide stability. Cash reserves might not be exciting, but they often keep you from making emotional decisions when markets get choppy. Bonds may never lead SportsCenter, but they can play an important role when the game gets tight in the late innings.
At Dinergy, we spend a lot of time talking about what your lineup should look like because every investor has different strengths, different goals, and a different tolerance for risk. The goal isn’t to build the most exciting roster in baseball. It’s to build one that can survive a long season.
Because just like the Reds, your financial future won’t be decided by what happens on Opening Day. It’s consistent good decisions over hundreds of games that usually determines who is still playing meaningful baseball when the leaves begin to change.
