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Yogi Berra Portrait

News

A Baseball Legend & Investing

Aaron Levitt Sep 27, 2015


I love baseball. And not just because by going to the games I can somehow justify eating like twenty hot dogs during the seventh inning stretch to my wife. Unlike many sports, baseball, most likely because of its age and standing in American history, is filled with crazy superstitions, folklore and amazing characters. It’s the only popular sport, in America anyway, that seems to have this atmosphere surrounding it.

Unfortunately, one of the most forthright and perhaps greatest of baseball’s characters, Lawrence Peter “Yogi” Berra, passed away this week at age 90. While Yankees fans will mourn the loss of one of the greatest catchers of all time and star of ten different title-winning teams, the rest of us lost one of baseball’s greatest philosophers.

Famous for his Yogi-isms, Berra’s silly sayings have actually touched upon the fabric of American society. They’re ubiquitous and everywhere. And while most of them apply to baseball or life, he had plenty of great advice that should be right there with, “Be fearful when others are greedy,” and, “Buy when there’s blood in the streets.”


“I Never Said Most of the Things I Said”


Wall Street and the Yankees have a long history with each other. After all, Yankee Stadium is only a short subway ride from the NYSE. You can often see “The Suits” watching a game after work. The two go so much hand in hand that Wall Street co-opted many of the sport’s phrases into its own language. There are actually options trade set ups that use baseball terminology. That co-opting also includes a hefty dose of Berra’s famous Yogi-isms.

And for good reason. Some are pretty darn good pieces of investing advice.


“A nickel ain’t worth a dime anymore.”

This could be Berra’s cautionary tale about inflation. Inflation, or the steady rise in prices/services, is the reason why we invest in the first place. It’s a silent killer in our portfolios, stripping away our purchasing power. And while inflation is basically nonexistent today, it is something that will come back and investors need to be prepared to tackle it head on.

“Ninety percent of this game is half mental.”

Your brain can really screw up your chances for financial success. Volatility is inherent in investing in stocks. It’s going to happen. The markets can’t go up in a straight line forever. Panic selling, trying to time the market, and so on are all tricks of your brain. Behavioral finance studies have shown that we feel losses more than we do gains. And it doesn’t take much in the way of losses for us to really feel it. So you’re more likely to bail on something when it’s going down in price. A better strategy would be to revisit the reason why you purchased something in the first place. If the thesis is still good, stay the course.


“Nobody goes there anymore. It’s too crowded.”

Once your grandma got on Facebook, it was over. The same thing happens in the investment world. By the time the talking heads on CNBC start discussing water stocks or social media firms, the smart money has already left the building. The lesson is to recognize when a trade becomes too popular. You don’t want to be the last person buying shares just before the crash. Don’t be a bag-holder.

“It’s tough to make predictions, especially about the future.”

Each day, there are hundreds of earnings forecasts, economic data predictions and bullish reports written on the potential growth of an industry. Rarely do anything of these predictions come to 100% fruition. They may come close, but never 100%. The best course of action is stay invested and take forecasts with a grain of salt.


“The future ain’t what it used to be."

When many investors pick out a new mutual fund or ETF, they always look at the fund’s previous returns first. Everybody does it. However, those historical returns are meaningless when it comes to the future. That’s why all investment products come with the same disclaimer: “Past performance is not a guarantee of future results.” Whatever the fund returned in the past has no real bearing on the future. Look at the product’s or investment’s future merit instead.

“If you don’t know where you are going, you’ll end up someplace else.”

Much of financial success comes down to planning. Buying a fund here, a stock there, or a couple of ETFs in this or that account won’t get you very far towards your financial goals. Having a written plan in place and sticking to that plan is a sure fire way to see success.


Right Up There with Buffett


Not bad for a guy from St. Louis. Ultimately, Berra’s advice, which may seem hokey at first, is at the root of some great investing principals. It’s all timeless advice that you can use to steer your portfolio over the long haul. With a hall of fame spot in Cooperstown under his belt, Berra also deserves to have his place alongside Buffett and others in the investing lexicon hall of fame.

Enjoy the weekend, take these quotes to heart and get ready to watch baseball’s most exciting time. The playoffs are starting.

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