BROADCASTS.com

b"With Robert Stammers, Director of Investor Education at the CFA Institute, Contributor for Huffington Post



Bob Stammers likens managing your investments to an NFL team, and believes one can learn a lot from football strategy that can then be applied directly to managing your money. For example, like football teams that spend a significant amount of time in the preseason determining their overall team strategy, investors must also determine their overall investment objectives, what strategies they will employ and which assets they should purchase before constructing a portfolio.

Just like an NFL team, an investment portfolio needs solid offensive and defensive strategies that are determined through the assets you buy. On a football team, players are picked to play a specific position on the field. In investment management, each asset has a specific role in achieving an investor's long term financial objectives. In fact, it's the asset allocation between investments in securities like equities, bonds, and alternative assets that have proven to have the greatest impact on a portfolio's investment performance. For example, in many portfolios a large allocation to equities is an offensive strategy that can be compared to the passing game. However, like the passing game, equities are also riskier in relation to most other assets and can cause investment losses and portfolio values to swing unpredictably.

Investing in bonds can be compared to the ground game. Using running backs does not usually result in large yardage gains, however it does provide stability in the offense and reduces the risk of turnover. Like the ground game, bonds provide portfolio stability and although performance is often less than that of equities, it is much more consistent and in investment terms does not provide as much risk. You get the idea.

Bob also provides analogies for alternative assets (real estate, commodities, private equity and hedge funds), managing risk, playing defense, and having the right coach."