Broker Check
Do you have the right players on the field?

Do you have the right players on the field?

May 08, 2020

If I were offered to replace Theo Epstein as General Manager of the @Cubs, would I decide to build a lineup solely consisting of left-handed power hitters and hard throwing right-handed pitchers?  Doing so would likely limit the team’s speed and defense and make the pitching coach’s job extremely challenging when trying to keep the opposing batters timing off or mixing up the approach of the pitcher’s delivery.

Similarly, your investment strategy should have different players with different unique attributes.   Diversification means having some investments that can run fast and others that can hit for power.  Certain investment choices can be viewed as strong defensive options and others are multi-tool players.  By having complementary investments with low or negative correlations, your strategy will increase in likelihood that not every investment will go down at the same time, nor will every investment go up in value at the same time.

As Cubs General Manager, would I try to load my lineup with a team of players that all share “Ricketts” on the back of their jersey?  It’s highly unlikely that a team consisting of all “Ricketts” would be the best players at each of the key player positions in the field.  When you look at your investment portfolio, do you see a heavy dose of investments from the same fund company?

A GM is looking for players that have a balance of history AND future potential. Players should have special and unique talents that make them great at their position.  Remaining agnostic to the name on the back of the jersey is a wise choice.  Similarly, when we build out an investment portfolio, we maintain an agnostic approach to fund company, looking for players with a balance of past performance and future potential as well.  When varied talents come together that complement their peers, then you have diversification and a potential for true team character.

As the coach of your team, you deserve the best chance to win.  That means having the best players in the right positions, working together towards a common goal.  If you’re unsure if your lineup has the right players and chemistry to compete, schedule a call to determine where a trade might be in order or a general manager change is necessary.

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