FINANCIAL FOCUS: Investors can learn much from Super Bowl teams

Joe Faulk

Joe Faulk

Published: Friday, January 31, 2014 at 03:50 PM.

If you’re a football fan — and even if you aren’t — you are aware that the Super Bowl took place Sunday.

The 2014 game shared many similarities to past Super Bowls in terms of what it took for the two teams to arrive at the championship. Some of these same characteristics apply to successful investors.

Here are a few examples:

Good offense. Most Super Bowl teams are adept at moving up and down the field and crossing the goal line. And good investors know how to choose investments that can provide the gains they need to keep moving toward their own goals, such as a comfortable retirement. That’s why, at every stage of your life, you will need to own a reasonable percentage of growth-oriented investments, such as stocks and stock-based vehicles.

Strong defense. Even a good offense usually isn’t enough to vault a team into the Super Bowl, which is why most participants also have strong defenses.

Similarly, the best investors don’t just put all their money in a single type of aggressive instrument and forget about it; they know that a downturn affecting this particular asset class could prove extremely costly.

Instead, they “defend” portfolios by diversifying their holdings among a range of investments: stocks, bonds, government securities, certificates of deposit and so on. And you can do the same. Although diversification can help reduce the impact of volatility on your portfolio, it can’t guarantee a profit or always protect against loss.

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