What Baseball Teaches Us About Financial Planning and Long-Term Investing

In Florida and Arizona, men have gathered for that first sign that spring is coming. Forget about birds and flowers, it’s the beginning of spring training for Major League Baseball.

It’s a time of hopefulness and restoration of life. We begin watching the new buds appear that will blossom in late fall as the greatest of all sporting events, the World Series, will unfold.

As you can tell, I still believe that our national pastime is and continues to be baseball. Football has had its short season, and we are exhausted by the violence.  Now we settle down for a pastoral game of fair play, strategy, individual excellence, and teamwork. I believe that baseball is a metaphor for life and for financial planning.

Investing for the future requires time more than anything. Investing is a long game. Baseball is a long season. One hundred and sixty-two games. Long-term investing will see many downturns, but the upturns make all the difference. In baseball, the best team is going to lose 50 games or more and the worst team is going to win 50 games or more. 

With the stock market I have personally seen four major downturns of the S&P 500 index in the last 24 years and yet the total return during that entire period has beaten indexes of the bond market, real estate, and commodities. Baseball teaches that a few losses don’t mean the season is over. It tells us to be patient.

Baseball also shows us great achievements of the individual, but that alone cannot carry the team. Hank Aaron had only three or four plate appearances, at the most, in a single game. It takes the entire team to get a win. A star pitcher throwing a “no-hitter” can’t do it without a great defensive squad behind him.

The same with investing: One stock cannot carry an entire portfolio for long. A diversified team of other stocks, bonds, real estate, crypto, and other assets are needed to achieve one’s goals.

Baseball tells us to put failure in prospective. A batter who consistently registers a hit in only three out of 10 at-bats is considered hall-of-fame caliber. Seven out of 10 times he fails to get a hit. I have seen people put everything they had to start a business, and they struggle and fail for three to five years before the business takes off. Some businesses never make it, and the owners have to start over again to save and invest enough to retire. I have a very successful client who failed at his own business in his early 50s and still was able to go back to work and save and still retire comfortably at age 66. Failure is a part of life and baseball shows us how to accept it and move on.

Baseball is unlike all other sports in two distinct ways. First, in baseball the defense controls the ball. Think about how that applies to our financial lives. We control the “ball,” our money and investments, and we are defending against losing it or spending it to quickly or having taxes take away too much of it. A financial plan is mostly a defensive playbook. The commitment of the individual to live below their means and save and invest is the offensive part of the game.

The second way that baseball differs from other sports is that it does not have a clock. Each team gets an equal opportunity to win. The game can go on until someone wins. A batter can stay at the plate and hit foul balls as many times as he wants until the last strike, or he gets on base.

In financial planning we don’t know how long the game will last. We don’t know when a client’s life will end. We keep doing what we can to provide for and reach goals as long as we can till the big umpire in the sky calls the third strike.

So, start getting your peanuts, Cracker Jacks, and hot dogs together and go see a Certified Financial Planner™ with the CFP® marks to get your finances in order.

And go, Rangers!

Wes Shannon CFP® is a Certified Financial Planning Professional for Brazos Wealth Advisors in Fort Worth.