My Take: Baseball and Investing: The Dawn of a New Era? — Brian Zdrowak
Brian Zdrowak, Dopkins Wealth Management, Buffalo, N.Y.
My father loves to tell the story of Mickey Mantle hitting a 565-foot home run in 1953, a ball that landed in a housing development beyond the left-field wall at Griffith Stadium in Washington, D.C.
My best friend likes to brag about the time he invested in a $5 stock, then watched as it increased all the way up to $62.
People love talking about home runs, whether it’s reminiscing about big-league blasts or picking the next Apple or Google stock. What is overlooked is that Mantle struck out 1,710 times, or nearly three times for every home run he hit in his 18-year career. And if you sat down with my best friend over a beer, eventually you would hear about the many more times he struck out with an investment, instead of hitting a home run.
That love of the home run has led baseball to a troubled era, one in which already great hitters have turned to performance-enhancing drugs in an effort to get that extra edge and hit even more home runs. As a result, baseball’s headlines have been dominated by players who have been accused, caught or suspended. If you are like me, you are wondering why gifted and talented athletes would risk their health and career for more.
Ask yourself, why would baseball players, with such gifted ability, risk it all just to hit monster home runs? Why did employees at Enron put all of their savings into Enron stock? We want to be above average, we think we can juice returns because we are smarter than the average investor and, without a plan, we take shortcuts.
While being average in baseball means a great salary and benefits, being great in baseball means megabucks and superstar status. But at what cost?
When looking at your 401(k), do you want to play the game of having a long, steady career or do you want superstar status? Are you willing to risk it all by trying to juice returns by jumping in and out of the market, and buying or selling stocks when you think the time is perfect? Similar to the behavior of baseball stars, this behavior has proven to be self-destructive.
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