Our Thoughts

The Redskins, Emotions, and Investing

First, let’s get this out of the way…I was born in Denver and have been a Denver Broncos fan from day one.  Yes, even through the late 1980s when the NFL team from Denver went to the Super Bowl (and lost badly) in three out of four years, I was a Broncos fan.  Through the good (two Super Bowl wins!) and the bad.  So I have no pony (pun intended) in this train wreck of a show that the Washington Redskins are going through this year.

As you may know, in the NFL draft of 2012, the Redskins made a trade with the St. Louis Rams that enabled the ‘Skins to draft quarterback Robert Griffin III – in return for what ended up being six players who are now on the Rams’ active roster.  The Rams (humorously to some) made that point last week by making all six players their team captains for their visit to RFK stadium to play the Redskins.  The Redskins and their fans, meanwhile, are left with a team that is flirting with being the worst team in the league and a franchise quarterback whose future with the team is very much in doubt.  The fans and the organization are agonizing over what to do with this “investment”.

As a Financial Advisor who interacts regularly with investors, I find the situation that the Redskins are in to be quite analogous to the situation in which many investors often find themselves – having to make an emotional decision of whether to keep an investment or let it go in favor of a better investment strategy.

Clients often come to our firm holding investments that they own for all kinds of reasons; an inherited stock from Grandma, an investment bought based on a tip from a friend, or a mutual fund they picked years ago after significant research or effort on their part.  We are always asked whether they should keep the investment and what we would do in place of it.  Similarly, clients have found themselves (especially since the financial and crisis of 2008 and subsequent collapse of many housing markets) in homes that are worth less than what they were worth at the (artificial?) height of the market.  They say that they don’t want to consider moving or selling until the house regains its “value”.  But what if that value at the height of the market will never be seen again?

The good news is that the client is asking the right questions to the right people.  It wasn’t our house, or Grandma, or friend, or effort and research that resulted in the holding, so we are able to objectively look at it without emotion.

I won’t purport to give the Redskins or their fans advice – that is beyond the scope of my expertise – but I CAN tell you what we tell our clients when they are faced with these types of financial situations.  We tell them to find an investment strategy that falls within their financial goals and tolerance for risk – and get on board with that strategy.  Don’t hold onto an old investment that may have been right yesterday, but is no longer good today.  Don’t wait on an investment that may never be worth what it once was (or what you thought it might become).  You must determine what the best strategy or investment is for you going forward, NOT looking in the rear view mirror.  If it is the same investment you have had, then keep it.  If not, move on and move forward.