This one is for all of you baseball fans out there – Opening Day 2021 is finally upon us. Much of the news in our neck of the woods this time of year focuses on the expectations of the Phillies and the team’s star outfielder, Bryce Harper. I think you would all agree with me, expectations are very high. Phillies fans want Harper to be an All-Star and have MVP seasons year in and year out. Phillies fans want Harper to lead the league in RBIs and home runs and play gold glove winning defense for 162 games. Phillies fans want Harper to lead the Phillies to a World Series Championship. After all, these sorts of high expectations tend to fall on a star who earns the biggest contract ever signed by a Major League Baseball Free agent.
Working at Sarian Strategic Partners, helping guide and direct clients both from a planning and investment standpoint, coupled with the start of baseball season has got me thinking a lot about the importance of maintaining a long-term perspective. Phillies fans should be thinking about Bryce Harper’s contract and production similar to how long-term investors should be thinking about their portfolio.
In 2019, Bryce Harper signed a 13-year deal worth $330 million. At the time, this was the largest contract ever signed by a free agent in the MLB. Some argue that this was an outrageous investment, putting way too many eggs in the Harper basket, while others would advocate that the Harper contract was a steal for the Phillies organization. Regardless of which side you fall on, the fact of the matter is, all fans expect a return on this investment, and most expect it immediately and consistently. But I would caution that way of thinking because Harper is in it for the long haul.
In Harper’s first year with the Phillies, he finished the 2019 season with 114 RBIs and 35 home runs, making him the first to have 100+ RBIs and 35+ homers since Phillies legend Ryan Howard exploded for 141 and 45 back in 2011. Despite his solid individual effort, the Phillies finished the season in the basement of the NL East with an 81-81 record and missed the playoffs. The shortened 2020 season also resulted in an underwhelming finish missing the playoffs yet again. Harper has put up some very strong individual numbers during his time in Philly, but the team has greatly underperformed, and many will still point the finger at Harper. I would offer Phillies fans the same guidance we offer our clients when discussing expectations of their investment portfolio: keep a long-term optimistic view on Bryce Harper and the value that he will bring to the franchise over the life of his contract
There are still 11 years left on his contract which means he will be digging into the left handed batter’s box in a Philadelphia uniform into his late 30s. Relative to the average MLB career, this is a very long period of time. He may have a couple of down years here and there. Anything could happen when you simply look at one year. But based on his career and his level of talent, there is a strong possibility that he will add incredible value to the franchise over the life of his contract. The same notion can be compared to the stock market. Trying to predict what will happen in any one year is nearly impossible. But when you zoom out, there is much more certainty that over a 10+ year time horizon, time in the market will be rewarded. Investors should not expect their portfolios to have MVP type seasons every year and also not get overly concerned if there is a year where it finished 4th in the NL East.
While we cannot predict with certainty what the market will do in the future, we do have certainty in our team’s process to manage those down years to provide long-term results. Our investment committee here at Sarian Strategic Partners spends countless hours building and customizing portfolios based on each clients’ individual needs and goals. The overarching objective of our investment process is to give clients the best chance at achieving financial independence throughout their retirement years. Last year was a prime example of how unpredictable things can be in life and the markets. I am proud of our investment committee as we made proactive changes in clients’ portfolios and helped coach our clients through a challenging time of extreme volatility. We will continue to be proactive as the economy and markets change over the next decade. One hundred years of market history tells us it is likely that we will see market corrections in the future. More importantly, history also tells us that investors who maintain a long-term view will be rewarded. Will Bryce Harper and the Phillies win a World Series in 2021…? Who knows. But I do think the chances of Bryce Harper leading the Phillies to a World Series Championship in the next 11 years are pretty good.
Kevin Wager CFP®|AIF®
Financial Advisor