Professional football teams are built similar to any other well-run organization. Good management and a talented, hard-working team will put themselves into situations that enable them to succeed more often than not. With one of the biggest national sporting events quickly approaching, we take a look at how the Super Bowl relates to portfolio opportunities, and how investors can achieve all-star plans that provide long-term “investment touchdowns.”
Build a well-diversified team. To create a successful football team that moves on to the Super Bowl, coaches draft players with a wide-variety of skill sets. When it comes to investments, make sure to diversify and choose asset classes that “play well” together as a team. When building this team of investments, we suggest the following:
Quarterback (Blue chip companies) — We look for well-established blue chip companies that have a proven track record of success with limited downside. These companies are more nimble than most and are able to audible when they anticipate concerns. Examples include: Boeing and Honeywell.
Defense (Fixed income) — All portfolios need strong defenses that have the ability to take the blows of adversity throughout time, but also do not give up too much ground. Fixed income plays the role of defense in a portfolio at Fort Pitt Capital. We build a solid, high-credit quality portfolio that is meant to protect the portfolio in times of turmoil and provide incremental income as well as capital preservation.
Offensive line (Securities) — Establish a strong anchor of securities that provide the foundation to build around. Often these aren’t household names, but provide the core of the portfolio and a solid base.
Listen to your coach. Only a top quality coaching staff is able to motivate their team to perform at their best. The focus at Fort Pitt Capital is to find the right investment professionals and let them perform in their respected field. Investors need to learn to trust their “coach” (advisor), so that they can work together to focus on long-term goals and objectives.
Don’t let penalties hold you back. When a flag gets thrown, while it does cause a slight setback, players learn from their mistake and perform better next time. Same goes for investments –learn from portfolio mistakes and move on. Non-profitable security selection doesn’t negate us from our focus on our overall long-term proven plan.
Call a time-out. During the big game, it’s understandable if players are nervous, but this can lead to forcing plays and making hasty decisions, so taking a quick time-out can be helpful. When it comes to your portfolio, stay long-term oriented, and don’t let daily news sway your overall investment plans. Take a moment to reflect on any good/bad news and remember to follow through on the plan that was put together between you and your advisor.
Be wary of players that dazzle today and are gone tomorrow. Some players earn a celebrity role and while they have some promise, they fizzle quickly. Often, the ones that keep their head down and focus on the game become valuable players over time. With investment plans — just as with primadonna receivers on a team — high return securities may have to be sold off if the price overrides the future potential. Therefore, we look to value oriented stocks that have strong long-term growth plans for the future and have been steady, proven “players” in our client’s portfolios.