How Investing Is Like Football - Motley Fool Stock Advisor https://www.fool.com/premium/stock-advisor/coverage/18/coverag... How Investing Is Like Football Dan Caplinger | February 2, 2021 | Mindset KEY TAKEAWAYS Both football and the stock market experienced significant changes over the years A well diversified portfolio is like a strong team, with all players working toward victory Everyone has different perspectives and it is important to focus on your own goals A great coach is critical, but it is the players that ultimately determine the outcome There's a football game scheduled for Sunday, Feb. 7. I'm too scared to write its name here, because our in-house legal team has reminded us that the entity that owns its trademark is sometimes aggressive in defending its intellectual property. Suffice to say that it's the 55th installment of the annual event, it features the Tampa Bay Buccaneers and the Kansas City Chiefs, and it just so happens that the Floridabased team will get a home game out of the deal. Part of what we try to do with Mindset articles is to put investing concepts into terms that people can better understand. As it happens, successful investing has a lot in common with football. So regardless of whether you're planning to watch the festivities come Sunday, here are a few things to ponder about your investing strategy. 1 of 5 03.02.21, 12:55 How Investing Is Like Football - Motley Fool Stock Advisor https://www.fool.com/premium/stock-advisor/coverage/18/coverag... Image source: Getty Images. 1. Both Have Been Around for a Long Time, Yet They've Changed a Lot The history of American football dates back to the 19th century, with the game having adapted itself from various forms of rugby and similar sports in the U.K. in the mid-1800s. Over time, though, football has evolved, with several key events like the formation of professional leagues, rule changes, expansions, and equipment advances pushing football further into the collective American consciousness. The modern game has much in common with how football was played 50 or 100 years ago, but someone from 1921 or 1971 might be amazed at the changes that have happened in that time. Similarly, U.S. stock markets date back to the post-Revolutionary War period, with the New York Stock Exchange's founding in 1792. In that time, markets have gone from open-call floors where actual people handled every single order to magnificent technological wonders with computers processing billions of trades. Yet at its root, investing is still the same — people buy a company's shares from those willing to sell them in the hopes that the company can be successful and make them money over time. Those 18th century Wall Street traders might not recognize the NYSE now, but they'd still understand what it means to buy, sell, and own stocks. 2 of 5 03.02.21, 12:55 How Investing Is Like Football - Motley Fool Stock Advisor https://www.fool.com/premium/stock-advisor/coverage/18/coverag... 2. You Have to Have a Strong Group of Players A championship football team is like a well-oiled machine, with people working together seamlessly toward the common goal of victory. Some players get more credit than others, and the contributions of some might not be obvious at a glance. But in any given play, all 11 team members are doing something further the team's efforts. The same thing is true about a well-diversified investment portfolio. Here at Stock Advisor, we draft many different stocks, knowing that some will end up performing like a Hall of Fame quarterback with dramatic long-term performance. Other stocks won't necessarily light up the scoreboard, but their resiliency year in and year out will make a big contribution not just toward total returns but to the stability of our portfolios. [Looking for stock ideas? Check out 10 of our favorites from across the Foolish investing universe.] 3. Not Everyone Has the Same Perspective Football as a game captures the attention of hundreds of millions of fans. But some have taken the game and transformed it into a completely different pursuit. Fantasy football isn't concerned with what team wins a given game but rather on how individual players perform. Winning at fantasy football takes a completely different skill set than a football player needs to win on the field. Similarly, many people in the investing world don't look at investing as a chance to participate in the success of great companies. Some traders buy and sell stock tickers without even knowing what companies they represent. The skill set of a day trader is far different from that of a long-term investor, and you can be successful at one while being terrible at the other. We want you to be a long-term investor, but we recognize that there are short-term traders out there, and being aware of what they do and how they do it can give us an edge in accomplishing our goals. 3 of 5 03.02.21, 12:55 How Investing Is Like Football - Motley Fool Stock Advisor https://www.fool.com/premium/stock-advisor/coverage/18/coverag... Image source: Getty Images. 4. There's a Lot of Doing Nothing in Between the Action Some people complain that football involves a lot of doing nothing with brief periods of intense activity. Breaks of 25 to 40 seconds between plays, seemingly endless timeouts, pauses at the end of each quarter, and a long halftime show hide just how little time gets spent in punishing face-to-face action. Moreover, a week or two of preparation time culminates in a contest that finishes up in just a few hours. The same is true in investing. Most of the time, you'll just sit back and watch the companies in which you've invested slowly build up their businesses. Occasionally, you'll get a piece of news that represents major progress, like an acquisition or a big business win. But successful investing takes a lot of prep work, and you can't expect to see big returns come day in and day out. 5. A Great Coach Makes All the Difference — but the Players Still Play the Game The reason you're here with us as Stock Advisor members is to share in our insights and ideas. Like any 4 of 5 03.02.21, 12:55 How Investing Is Like Football - Motley Fool Stock Advisor https://www.fool.com/premium/stock-advisor/coverage/18/coverag... good coach, we want to give you all the tools you need to put together a winning portfolio. But we also recognize that in the end, your investing decisions belong to you and you alone. We've put together the Stock Advisor playbook with an idea toward establishing key investing principles that have produced immensely successful results during Tom and David Gardner's illustrious careers. Our stock recommendations put those concepts into practice. But exactly how you take our stock picks and turn them into a winning portfolio depends largely on you and your own personal experiences. Fortunately, there's no one way to win at investing — and so you'll find many successful investors in our Foolish community who've followed very different paths to reach financial independence. Enjoy the Game! ! " Quick question: Was this page useful? Lastly, the stakes involved in both investing and football are huge. For football players, winning a championship is the pinnacle of their careers. For you, successful investing means being able to provide for yourself and your loved ones both now and years into the future. You have a lot of incentive to get it right, just like Sunday's participants will all be giving | their best to win. ||| We're glad you're on our team here at The Motley Fool. We want to help push you over your goal line and © 1995 - 2021 The Motley Fool. All rights reserved. into the end zone of financial freedom, and we look forward to many winning seasons yet to come. Market data provided by FactSet and Web Financial Group. The Motley Fool has a disclosure policy. 5 of 5 03.02.21, 12:55
