With excitement building around the upcoming Super Bowl, it is fun to note the many connections between football and investing. This annual professional football championship provides an opportunity to bring a fresh perspective to the typically staid topic of investment strategy by drawing lessons from the game of football and applying them to an investment portfolio.
In football, the primary offensive objective is to score touchdowns and there are several strategies that coaches use to accomplish this goal. No coach uses one strategy exclusively, but, rather, diversifies the playbook to provide different approaches according to the conditions at the time. Likewise, the objective in investing is to earn returns. Investors rely on a variety of strategies to garner returns. Just as football coaches allocate resources to various strategies as the game changes, so too do investors adjust their asset allocations as goals and market opportunities change. Consider some of football’s basic offensive strategies:
The big risk, big reward, strategy of football is passing. A team can gain a lot of yards in a single play, sometimes even scoring a touchdown or at the very least improving the odds of scoring one. It is possible to score with only a running game, but without a good passing game, a football team will struggle to score the points necessary to win the game. Yet the rewards that come from passing plays come with bigger risks than running the ball. Incompletions and even interceptions are risks involved with a passing strategy. Good coaches understand the risks and mix up the strategy (screen passes, long bombs, etc.) to help control risk.
In investments, these passing strategies equate to the allocation of stocks, commodities, and some alternative assets. These types of investments provide the long-term return potential that many investors require to achieve their financial goals. Investors need to know the risks and diversify their strategies (growth, mid-size and small, international, and emerging market companies) to help capture those opportunities.
The steady, lower-risk strategy of football is the running game. Running the ball usually gains fewer yards per play than passing, but it provides consistency and control. A strong running game helps manage the clock, maintains field position, and reduces the likelihood of costly mistakes. While explosive runs and touchdowns can happen, the primary value of running plays is reliability. Teams that rely on the run may move down the field more slowly, but they can still score and remain competitive by limiting turnovers and keeping the offense on schedule. Coaches vary their running approach (inside runs, sweeps, draws) to maximize efficiency while controlling risk.
In investing, the running game aligns with more stable blue-chip, dividend-paying companies. These investments typically offer more modest returns, but they provide consistency, capital preservation, and reduced volatility. They help investors stay invested during market fluctuations and support long-term planning. While these strategies alone may not generate rapid growth, they play an essential role in maintaining balance and stability within a portfolio. When combined thoughtfully with higher-growth assets, they help investors progress steadily toward their financial objectives.
Certainly, every team would rather score a touchdown than a field goal. It’s a no brainer, six (or seven) points versus three. Sometimes, however, kicking a field goal and taking those three points rather than risking no points at all just makes better sense. For instance, when it’s third and long, it’s often smarter to run the ball to the middle of the field to set up a solid chance at three points, rather than potentially scoring no points.
Having a lower risk, lower reward strategy is a good idea in both football and investing. Investors may at times choose to take the three points to stick with the bulk of their long-term plan. This usually means owning bonds and other income-oriented investments. Though a team may want a touchdown, at times it is more prudent to just take three points. In investing, cash flow, low volatility, and liquidity are important characteristics of many investments that help to round out the overall investment strategy.
Sometimes, especially if a team is in poor field position, deciding to simply punt and then rely on the defense to stay in the game is the best strategy. What is important is to stay in the game, catch one’s breath, and review the overall game plan. For most investors, defense means having 12 to 18 months of living expenses in short-term liquidity such as bank deposits, money market vehicles, and short-term bonds. By having these assets in the portfolio, an investor can ride out a rough patch without throwing away the entire playbook. Investors may otherwise find themselves so concerned about market conditions that they are determined to sell everything.
A football team has many options to move the ball down the field, and investors have many options to achieve their investment goals. Keeping all these options available and properly deployed will help them adapt to changing game conditions, and it will help investors stick to their game plans. In some instances, coaches may need to boost resources to their field goal or punting teams. Likewise, investors may need to boost their allocations to less risky assets if their goals change or market conditions become so challenging that a modest shift will help them stay in the game.
With the upcoming Super Bowl and these investment lessons in mind, we urge you to meet with your advisor to determine your own game plan. This is an opportune time to review your long-term asset allocation and risk targets and make sure that your overall portfolio strategy and risk exposure are realistic for today’s ever-changing financial environment. We continue to maintain our view that the economy is on solid footing, but remain realistic that, in the near-term, it may feel like a long, cold, and fumble-filled game of football.
Dr. Erik Davidson, CFA, CTFA is the Chief Economic Advisor for Inspire Investing. Previously, Dr. Davidson served as the Chief Investment Officer for Wells Fargo Private Bank, overseeing more than $200B in assets. Dr. Davidson holds a doctorate degree from the DePaul University’s Kellstadt Graduate School of Business with his research focus in Behavioral Finance.
With excitement building around the upcoming Super Bowl, it is fun to note the many connections between football and investing. This annual professional football championship provides an opportunity to bring a fresh perspective to the typically staid topic of investment strategy by drawing lessons from the game of football and applying them to an investment portfolio.
In football, the primary offensive objective is to score touchdowns and there are several strategies that coaches use to accomplish this goal. No coach uses one strategy exclusively, but, rather, diversifies the playbook to provide different approaches according to the conditions at the time. Likewise, the objective in investing is to earn returns. Investors rely on a variety of strategies to garner returns. Just as football coaches allocate resources to various strategies as the game changes, so too do investors adjust their asset allocations as goals and market opportunities change. Consider some of football’s basic offensive strategies:
The big risk, big reward, strategy of football is passing. A team can gain a lot of yards in a single play, sometimes even scoring a touchdown or at the very least improving the odds of scoring one. It is possible to score with only a running game, but without a good passing game, a football team will struggle to score the points necessary to win the game. Yet the rewards that come from passing plays come with bigger risks than running the ball. Incompletions and even interceptions are risks involved with a passing strategy. Good coaches understand the risks and mix up the strategy (screen passes, long bombs, etc.) to help control risk.
In investments, these passing strategies equate to the allocation of stocks, commodities, and some alternative assets. These types of investments provide the long-term return potential that many investors require to achieve their financial goals. Investors need to know the risks and diversify their strategies (growth, mid-size and small, international, and emerging market companies) to help capture those opportunities.
The steady, lower-risk strategy of football is the running game. Running the ball usually gains fewer yards per play than passing, but it provides consistency and control. A strong running game helps manage the clock, maintains field position, and reduces the likelihood of costly mistakes. While explosive runs and touchdowns can happen, the primary value of running plays is reliability. Teams that rely on the run may move down the field more slowly, but they can still score and remain competitive by limiting turnovers and keeping the offense on schedule. Coaches vary their running approach (inside runs, sweeps, draws) to maximize efficiency while controlling risk.
In investing, the running game aligns with more stable blue-chip, dividend-paying companies. These investments typically offer more modest returns, but they provide consistency, capital preservation, and reduced volatility. They help investors stay invested during market fluctuations and support long-term planning. While these strategies alone may not generate rapid growth, they play an essential role in maintaining balance and stability within a portfolio. When combined thoughtfully with higher-growth assets, they help investors progress steadily toward their financial objectives.
Certainly, every team would rather score a touchdown than a field goal. It’s a no brainer, six (or seven) points versus three. Sometimes, however, kicking a field goal and taking those three points rather than risking no points at all just makes better sense. For instance, when it’s third and long, it’s often smarter to run the ball to the middle of the field to set up a solid chance at three points, rather than potentially scoring no points.
Having a lower risk, lower reward strategy is a good idea in both football and investing. Investors may at times choose to take the three points to stick with the bulk of their long-term plan. This usually means owning bonds and other income-oriented investments. Though a team may want a touchdown, at times it is more prudent to just take three points. In investing, cash flow, low volatility, and liquidity are important characteristics of many investments that help to round out the overall investment strategy.
Sometimes, especially if a team is in poor field position, deciding to simply punt and then rely on the defense to stay in the game is the best strategy. What is important is to stay in the game, catch one’s breath, and review the overall game plan. For most investors, defense means having 12 to 18 months of living expenses in short-term liquidity such as bank deposits, money market vehicles, and short-term bonds. By having these assets in the portfolio, an investor can ride out a rough patch without throwing away the entire playbook. Investors may otherwise find themselves so concerned about market conditions that they are determined to sell everything.
A football team has many options to move the ball down the field, and investors have many options to achieve their investment goals. Keeping all these options available and properly deployed will help them adapt to changing game conditions, and it will help investors stick to their game plans. In some instances, coaches may need to boost resources to their field goal or punting teams. Likewise, investors may need to boost their allocations to less risky assets if their goals change or market conditions become so challenging that a modest shift will help them stay in the game.
With the upcoming Super Bowl and these investment lessons in mind, we urge you to meet with your advisor to determine your own game plan. This is an opportune time to review your long-term asset allocation and risk targets and make sure that your overall portfolio strategy and risk exposure are realistic for today’s ever-changing financial environment. We continue to maintain our view that the economy is on solid footing, but remain realistic that, in the near-term, it may feel like a long, cold, and fumble-filled game of football.
