Baseball & Investing
Posted: Jonathan Chapman
As a fan and student of the game, I’m excited that baseball season is upon us. Bottom of the 9th, 2 outs, full count, bases loaded, down by 3. As a kid, we constantly played out this scenario in the yard, pretending we were one of the MLB greats at bat hitting the game winning grand slam. These are the moments we love to see as fans and players dream to be a part of. In reality, those great moments are few and far between.
In baseball, I would argue that one of the keys to winning over the long-run is consistency. Sure, you may hit the walk-off home run to win the ballgame or pitch a no-hitter to lead your team to victory, but the odds of those events happening frequently over a long period of time are small. It is consistency that matters. Singles and doubles on offense and making the routine plays on defense is what wins most ball games. Yes, there are outliers, but the key to winning is consistency game after game.
Investing is much like the game of baseball. Winning over the long-run requires consistency. Devising a prudent strategy and creating a diversified portfolio that can hit singles and doubles, a few home runs every now and again, and provide solid defense to limit the downside is what wins in the long-run.