Finance and Football

Finance and Football

July 26, 2022

Finance Lessons in Football
Football season is fast approaching, and I am extremely excited about it. I never want to wish the summer away, but whenever we get about a month away from the football season I have a hard time not looking forward. With all the conference realignment discussions and the conference media days, there is a lot of news and a lot of excitement building. My team, the Michigan Wolverines, is in the thick of the news cycle with their conference, the Big Ten, adding two historical powers to their ranks in the next two years. Also notable is that the Wolverines this week are embarking on an “experiential learning” trip across the state of Michigan to visit the sites and sounds that make our state great and volunteer for local charities along the way. For those of you who follow the maize and blue, this year’s team trip is sure to ruffle less feathers than previous international expeditions led by Coach Harbaugh. For those of you who are not fans of the Wolverines I (jokingly) hope that this is the year you all come to your senses. All that being said, from the game of football there are many lessons that can be derived. Today we are going to look at some of those lessons and connect them to the topic of personal finance.

1. Stay balanced/ have a balanced attack
A football team cannot be one dimensional on offense if they want to succeed. You cannot exclusively run the football and expect the defense not to take that away and neutralize that eventually. That is of course unless you have Hassan Haskins on your team. You also cannot exclusively focus on the passing game and not expect that a time will come where you need to run the ball. You can’t throw all your eggs in one basket.
Investing for retirement is no different. Diversification is the name of the game and necessary to stem the ebbs and flows that the market provides. Choosing to only invest in one company or one sector/industry opens the door to extreme amounts of risk and could result in massive losses. That’s why it can be good to diversify your money over different companies and sectors. Certain industries and companies can have higher amounts allocated to them based on your financial plan, but not everything is riding on their success. Being multi-dimensional is a great tool to foster success.

2. Sometimes the best offense is a good defense
Throughout my Michigan fandom, and especially during the current Harbaugh era, the Wolverine defense has been the highlight of the team. Michigan has had some good offensive teams, but none have been special enough to carry the team to sustained success. On the contrary, there have been quite a few years where the defense has carried the team to victory in games where they should have been defeated. If no one can score on your defense it makes life much easier for your offense to get enough points to win.
Having a rock solid plan in place when things go sideways helps steady the ship and keep from making bad decisions. In volatile markets the impulse reaction for risk averse investors is to sell quickly when they are losing money because they don’t want to lose more. They go on the offensive, making sure to sell before they reach the bottom of the sell off. Meanwhile, those with a plan in place play solid defense. They know the volatility of markets is part of the game. They stay invested and await the markets rebounding while also taking the opportunity to buy in more at lower prices. Defense can be an aggressive strategy too, and it may just win you a championship.

3. Always look the ball in
While not exclusive to football, it is paramount to always keep your eye on the ball. There’s nothing that makes a coach angrier than when a player is wide open and they fail to catch the football because they were already looking at all the green grass in front of them. Losing focus like that can cost a team a touchdown and can warrant a strong talking to from the head coach. In your retirement planning you play both the role of player and head coach. Your advisor is more like your Director of Player Personnel, but that’s neither here nor there. It is easy when the plan is coming together to look forward and see all that awaits you. It is definitely good to anticipate and be excited for your future, especially if you are close to realizing your financial goals. Your discipline and focus made that future possible and it’s something to be proud of. The warning then is to not get to far out in front of your ski’s. Don’t sacrifice the work you took to get to that point in an attempt to get what you want sooner. Trust your process and don’t forget to look the ball in.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.