Sitting in my home office looking at the resurgence of my retirement plans as my quarterlies arrive in the mail, I take a glance at my flat screen TV and see that the Philadelphia Phillies are closing out another lopsided victory over the Chicago Cubs.
As the Cubbies pull off their best Eric Bruntlett impersonation against journeyman Phillie pitcher Rodrigo Lopez, the Phightin's performance over the last three weeks reminds me of the volatility of my 401k plans and our recent economy.
And I heed the same advice—ride out the volatility, accept some short, downside risk in order to get long-term (uh, is a three-month schedule considered a long-tem bet?) returns.
As with any good portfolio, diversification is the overwriting component to success. Judge the sum of the parts and not one individual stock may be having a bad period.
All you fantasy league guys are the day traders of this world but the Warren Buffetts can see a good value and opportunities in market inefficiencies (trading deadline is a great opportunity for a short-term solution if you don't mind paying the capital gains tax by giving up a few prospects).
Starting off the Phillies portfolio is leadoff man Jimmy Rollins. When Jimmy was struggling in an 0 for 28 slump, the stock pickers were ready to dump this value pick like he was the next Bank of America.
The longest held stock in this Phillie portfolio, J-Roll has paid great dividends over time. “Look, Jimmy Rollins is what makes our offense go. Jimmy is what I like to call our catalyst" states portfolio manager Charlie Manuel.
Charlie may have cut the dividend temporarily in these tough economic times by batting Jimmy sixth and sitting him out for three games, but he always had faith in the core portfolio holding.
Jimmy has responded by raising his average from .202 to .236 after tonight's game. His year-over-year numbers may not be great, but when Jimmy's hot, so is this portfolio.
Shane Victorino would be the Small Cap Growth fund of this group of holdings. The first-time All Star is providing huge returns in this otherwise mature portfolio. The spitfire strikes fear on the basepaths and when combined with leadoff Rollins, they provide as a financially sound catalyst for the big boys in the middle of the portfolio, er, order.
Chase Utley is the big blue chip stock in this grouping. His dividends are higher than almost of all of his peers, is putting up great absolute returns, and has great fundamentals. He would be tops on the screening list of companies looking to take possession of the four-time All Star, but the Phillies have locked up Utley well into his mid-30s and is now one of their preferred stocks. He is the darling of Wall Street.
Another blue chip is Ryan Howard. The tech stock of the group may provide more volatility with his propensity to strike out, but he can carry Manuel the fund manager and the rest of the picks by going on a two-week tear. Not quite the consistent earnings of an Utley, or the career year he had in 2006, he is stook a good play to hit 45 home runs and 130 RBIs.
Raul Ibanez is the least-tenured holding in this mix of stocks being acquired via free agency from the Seattle Mariners in the offseason.
Ibanez was so hot and provided triple-digit returns in the first half of the season that his trading was halted due to a groin injury. In his first game back from his stint on the DL, he hit two home runs. Bought at a price of $7.1M, this stock with a relatively good PE was a great pick.
Jayson Werth was the fifth, five-star stock ranked by Morningstar, sorry, MLB to make the All-Star team. Werth would be my small- to mid-cap value play. He is streaky to the point of white hot at times. But we may have seen his full upside and will most likely not grow into a large-cap holding. If you can stand the volatility, hold tight and expect solid returns.
Pedro Feliz is my first bond holding. The steady third basemen will decrease your overall volatility and beta by providing solid defense and a new approach at the plate by using the entire field is providing extra alpha for this otherwise staid holding.
Carlos Ruiz. Another bond holding, his catching skills and handling of the pitching staff helps steady your overall financial plan. If Feliz is a high-quality corporate bond, Ruiz is your high-yield play which acts like a stock—he provided strong returns by hitting over .300 through May but his average has dropped 50 percent over the last six weeks.
The pitching staff, like our 2009 stock market, has shown signs of life in the second half. Over the last month, the starters have steadied the Phillies plan and have given more hope to postseason—this version of retirement—bliss.
Acting ace Cole Hamels figures to be better in the second half with better fundamentals and pitch location. I'd expect high returns from the 2008 World Series MVP in the last three months.
Joe Blanton will be classified as "slow growth." J.A., the newest member to the asset allocation mix, is the emerging market pick. Posting the highest returns of any asset class year-to-date, beware of Happ for his little track experience.
Lastly, closer Brad Lidge is the bank stock of this market needing government assistance and TARP money by taking his cranky right knee to the DL. He has had modest returns after his returning from being delisted from the index.
Charlie Manuel is running this portfolio like Will Danoff has run Fidelity Contrafund for the last fifteen years. He is making the timely buys and sells, or lineup changes and pinch-hitting appearances.
Not cut from the classic Wall Street cloth, Manuel is more comfortable in the style and charisma of a Men's Warehouse suit and drinking beer out a can than his peers who wear Armani and order $500 a bottle wine. And Manuel has run as loose of a clubhouse as the SEC chairman Christopher Cox ran under the Bush administration.
So what to look for out this portfolio in the second half. Will Federal Reserve chairman Ruben Amaro, Jr. have a loose fiscal policy and pursue big free agent pitchers? Will he try to tighten monetary policy and just secure another arm to bolster the bullpen?
Will Amaro, the first-term chairman go after the king of all hedge funds Roy Halladay? Does he have to sacrifice the returns of the next decade by giving up Happ or a Kyle Drabek or a Dominic Brown.
Take the cue from your predecessor and "stand Pat" on this one. One torn labrum or Tommy John surgery can bring down Hallady faster than once behemoth hedge fund Long Term Capital.
Will their signing of diva Pedro Martinez be enough to decrease the volatility of the fifth spot in the rotation? The REIT pick of this portfolio, Pedro is the noncorrelated asset in this locker room. Let's hope this REIT doesn't default like the domestic commercial real estate market.
After a June gloom that resembled 2008 stock returns, this portfolio has come to life. The Phillies were a hostile takeover candidate of the American League by going 1-8 against the Red Sox, Blue Jays, and Orioles. The Phillies in high volume trading were being dumped by day traders faster than AIG last October.
However, their 12-1 record and nine wins in a row is a leading indicator of the second half succes. Their one game lead over the Marlins going into the last week before the break has ballooned into a 6.5 lead in the National League East.
So like any good financial advice, it takes discipline and patience to be a Phillies fan. If you have the intestinual fortitude for this grouping, you may very well be able to toast your stocks, um, Phillies, come October
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