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Tackling Asset Classes Like a Football Fan

Asset ClassesIt’s football season, and my heart is happy. What does that mean for asset classes, financial markets, or my planning, you may ask? I would happily answer, not much and probably nothing. But that won’t stop me from writing about it. What if we put the two together and see if we can make something special? Hopefully, this will be like hot wings and ranch dressing and less like a Mark Sanchez’s butt fumble.

From 401ks to brokerage accounts, we see so many “caps” on our statements. What does it all mean? Well, I’m not going to break down asset classes or how they work. I feel the time would be more productive (and fun) to compare them and their performances over the last decade to NFL teams. Yes, these asset allocations will direct your account through various markets, providing a myriad of results. But at times, we will individually compare them to their compadres, ranking each class on its performance. Every year there is a clear winner and not winner (can you say loser in 2021?) Like any team can win on any Sunday, the same can be said for asset classes. If you don’t know NFL teams or asset classes, maybe just read through it to find a joke that’ll make you laugh.

Without further ado, asset classes if they were NFL teams.

US Fixed Income – The Saints

We are still warmed by the thoughts of Drew Brees and the hope the team offered during the rebuilding from Hurricane Katrina and we know that our neighbors in New Orleans will recover from Hurricane Ida (we are praying for you all) because the people of New Orleans are fighters.  It should be obvious that they probably won’t make it to the Super Bowl every year, even though we have built-in expectations that they are a safe pick.  US Fixed income has shown up during the 2008 Mortgage Crisis and many other times of market turmoil because it is the safe pick, but it has been relatively absent over the last decade.

High Yield – The Cowboys

It feels like a safe pick because you know it’s the Cowboys “God’s Team” and “America’s Team.” But then you realize that just because they play on Thanksgiving doesn’t mean that they make the playoffs. Jerry Jones and Dak Prescott aren’t exactly peas and carrots. No matter how much you want this to be a safe pick, it becomes difficult to justify the risk with looming inflation and equities looking attractive.

Asset ClassesSmall and Mid-Cap  – Cardinals, Jaguars, Titans

Oh man, insert a fun team to watch here. There is always one promising to be a Cinderella for the year. We buy it up because it’s fun, and there’s a chance it could work out. These are the new, fresh teams, and anything can happen as long as their GM (or CEO and Board) doesn’t mess it up. We are hoping they make it through to be the next dynasty. When that time comes, we will revel in their success and then cheer when the next small or mid comes to dethrone them. With the “New Normal” being continually created through the pandemic and technological advances, this space has added extra excitement.

Global Fixed Income – J..E..T..S Jets! Jets! Jets!

You may not have known this asset class existed.
Maybe you didn’t know the Jets were a team. You may even be a Jets fan and not know you still have a team. This last decade has been painful to watch, and I can’t imagine participating in it. Dryer lint has had more consistent success. But we will add them to the list because you never know what a fresh-faced kid from BYU will do or negatively yielding bonds (smh).

Asset ClassesEmerging Markets – Chiefs

Have you seen Patrick Mahomes? Sometimes it doesn’t make any sense, and then others, it makes perfect sense. The Chiefs have a lot of speed and are very entertaining to watch. At times it’s more like a circus than a football game. Emerging markets are the same way, up and down big, and no one should ever count them out (especially when you have China or Tyreek Hill).

Developed Markets ex-US – The Steelers

You have to honor them if you pick’em every single week. Because you never know when they’re going to go off on a team. We always talk about the Steelers adding this and that and how they have been undervalued for years. But something always is getting in their way, whether it be a top-level running back that is holding out or sometimes it’s socialism. We hope for the best for our neighbors across the pond as they wade through the free markets.

Large Cap Value – The Packers

Every year is going to be “their year.” Generally producing a solid team that competes well but has come up short—constantly looking back at the good ole days when they dominated the landscape. Even the most dogmatic value investor’s patience has been shaken the last ten years watching large-cap growth produce year after year.

Large Cap Growth – Tom Brady

I know he’s not a team, but he’s had unmatched success. It’s like a weird experiment. “Hey, let’s throw Tom at the Bucs. There’s no way he’ll….. oh wait, that was magical.” Large Cap Growth seems like it cannot be stopped. With companies like Amazon, Google, Apple, and Microsoft, the team appears stacked and unstoppable. But every great player has an expiration date, and every season will come to an end.

Any asset class can reign as champion of the year, but things change, and markets continue to move. It is critical to weigh the risks and rewards of each asset class to see how they will best fit into your portfolio. What are we trying to accomplish, and in what time frame are good questions to ask?

That’s why we always look to have a balanced portfolio and look for tomorrow. Remember to build a good team and not look only for a flashy player. If you are looking for answers regarding balancing the risk and reward of your retirement portfolio, contact me to set up an appointment. I am just as passionate about helping others with their investments as I am for the NFL season and would be honored to assist you in the financial arena.

September 2021

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal. 

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. The prices of small and mid-cap stocks are generally more volatile than large cap stocks.

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