Throwing the Right Pitch
Photo by Bill Stephan on Unsplash
Discover personal finance articles on this website! Trevor shares his industry experience and knowledge through simple stories. May these short pieces encourage us to be better stewards of our resources.
I played baseball in the summertime. I considered myself a good pitcher. I had the accuracy and I could throw a fastball, circle change up, and curveball. Mastering a curveball was one of my favourite baseball memories. It’s a pitch that comes in a little high and can curve down. Batters are often baffled by the pitch, and it has a lot of movement to it. My coach wouldn’t let me practice it until I was a teenager. That way I could spare my arm from potential injuries as my body developed. After a few years, I finally mastered the curveball and was able to throw it often. Every play, my catcher and I strategized which pitch to throw—and sometimes it was a nasty curve.
I see parallels between pitching and investment decision-making. To determine what pitch to throw, we need to understand, anticipate, and practice. In a game, the pitcher needs to understand the environment and the situation. I wouldn’t always throw a curveball. That came maybe every four pitches. Certain batters were also better at hitting curveballs than others. The pitcher also needs to anticipate the following batters in the lineup, because that helps with the strategy. Sometimes pitchers intentionally walk a batter knowing that the next one won’t be as good. And pitchers need to continually practice their skill. After the season I mastered the curveball, I didn’t pitch until the following spring. Guess what? I lost the technique on how to throw a curve and never got it back.
Similarly in investing, we can understand, anticipate, and practice. We can take time to understand markets and certain sectors. If we lack the knowledge, we could pick up a beginner’s book about finance. We can rely on certain sources that we trust and that are reputable. We can also anticipate what’s coming up by talking with a financial advisor, family member, or friend. Seeking counsel can be very helpful and important. We can also practice—taking the time to read, investing in the market as we see fit, and reviewing our past investment decisions. This is part of critical thinking and decision-making. If we throw the right pitch, we might avoid major losses. If we don’t, the other team might hit a home run.