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Portfolio Lessons from Pokémon Go

Typically, a blog should be topical when written, but if you want to stand out among the electronic onslaught of media coverage, one must avoid being an “also-ran” on well-trodden topics, or at least take a fresh angle. The following is my take on an over-covered topic with a pivot to a subject I originally assumed would get much less press.

As the second quarter came to a close, the United Kingdom’s referendum vote to leave the European Union (EU), AKA “Brexit”, dominated the news. While Britain’s eventual exit from the EU and its impact on the future economic landscape is, at a minimum, more than two years away, the world’s financial markets swooned over two very uncomfortable days. As responsible advisors, our firm issued an immediate statement to our clients informing them we would assess ongoing developments and provide future guidance, but that no action was recommended at this time. As expected, everyone else in the financial industry had a Brexit comment as well. In fact, although I have committed to reading and/or listening to at least one Brexit recap each day, my backlog of material is voluminous.

The above “was” my introduction, but the barrage of Brexit coverage sentenced any blog entry on this topic to be largely ignored and lost in the shuffle. However, an event during the first week of July gave me a chance to pivot to a new topic I was sure I could tackle without much competition in coverage. Boy, was I wrong…but here it goes anyway!

Pokémon Go is a new augmented reality game you play on your smartphone. If you don’t know what I’m referring to, please stop reading now, because I love the game and am about to go deep in order to stretch a few parallels related to building successful investment portfolios.

The Pokéstop (Collaboration): It is commonly said that, of 10,000 planes, no one talks about the 9,999 planes that land safely — only the one that crashes. While Pokémon Go’s early days have been marked by system crashes and a few felonious incidents, the game has also created a magical fellowship around Pokéstops (floating blue squares within the game, to the uninitiated). This is where people gather to share information and obtain items to advance in the game. Like any successful client portfolio, common goals of collaboration, education, and trust are critical to success. The lesson here is that, while you can certainly go at it alone, you may be inviting unintended consequences. There is strength in numbers.

The Pokédex (Portfolio Construction): Like I said in the introduction, I’m really stretching for this one, but Pokémon Go, like building investment portfolios, is centered on choices. Portfolio capital (Pokéballs) is finite – one choice is to build a diverse portfolio with traditional investments (see Pokémon types: Rattata, Pidgey, Zubat, etc.) with reasonable costs (one Pokéball toss). However, in a low return environment, a portfolio of traditional investments may not meet future objectives (taking over a Pokémon Gym). To increase the probability of meeting objectives, investors should consider seeking out attractive opportunities (chasing down a rare Pokémon, such as a Vaporeon) to increase the probability of success. Understanding these opportunities and how they fit into your portfolio requires additional analysis, patience, and invariably higher costs (many, many Pokéball tosses and probably a few Razz Berries) in exchange for their greater potential rewards.

Gotta Catch’em All (Assessing Investment Opportunities): While I am an avid player in heated competition with my daughter to seek out and catch them all, as an investor, should you follow the herd, chasing after every opportunity just so you can sit at the investment “cool kids” lunch table? I am relating this choice to the reoccurring phenomenon of the “investment craze” (anyone remember 130/30?). The fact is, conferences and marketers will always position what can be effectively sold (Pokémon Go’s sales pitch – it’s free… mostly). This natural order creates an ebb and flow for what’s hot at any given point in the investment world. Filtering real opportunities from the latest fad is work. Unless you dedicate the time to understand the opportunity and how it impacts the rest of your portfolio, I would recommend avoiding it all together. There is no silver bullet.

 

Business Lessons Learned from the Hardwood

As a reformed college basketball player I’m always looking to sports, specifically basketball, to illustrate powerful virtues that I can share with my co-workers. Maybe I’m only trying to justify or rationalize all the time I spent playing the sport I loved growing up. Unfortunately, in the world of mega contracts and lucrative endorsement deals that we live in today, rarely can I turn to the NBA to showcase the actions and virtues I would hope my co-workers and I would choose to exhibit. However, this offseason saw one of the most surprising free agency signings in recent memory when Kevin Durant left Oklahoma City for the Golden State Warriors.

For days, sports columnists, talk show hosts and social media voiced their collective astonishment that this revered NBA superstar would leave the team and city where he had spent the entirety of his career, thus far. While the details on his new contract and opportunity make complete sense for such an important individual decision, to me, the real story is how Kevin Durant got to Golden State from Oklahoma City. The “how” in this surprising turn of events is a business lesson from the hardwood that should be shared, taught and never hidden below the fold.

Rumors coming out from those close to the situation claim that Golden State’s star player, Steph Curry, the reigning two-time NBA MVP, called Kevin Durant after he visited the team. The purpose of the call was to let Durant know that he was not concerned with who the face of the organization would be, nor was he concerned with who the public would deem as the team superstar. Curry didn’t care who would get all the publicity or the fancy endorsements that come along with individual accolades. What Steph Curry stated to Kevin Durant was, essentially, come to this team and help us win multiple championships. The Warriors motto during their incredible run last season was, “Strength in Numbers,” and nothing exemplified that more than Steph’s phone call.

Steph recognizes that legacies, and your place in history, are largely defined by how many championships you win, not by how many different pairs of shoes you release during your career. While many people, athletes and business professionals alike, claim they have this selfless approach in their careers, the reality couldn’t be farther from the truth. Steph Curry will only be the 4th highest paid player on his own team next year, let alone in the NBA. His statistics and popularity could easily demand the highest contract in the league. However, what Steph understands, besides dribbling and shooting, is the power of true success when you don’t care who gets the credit. While Golden State lost in Game 7 of the NBA Finals this past year with the best record in NBA history, the whole team just got much better and will be the odds-on favorite to win the title in 2017. Conversely, there is a good chance that Steph Curry’s personal statistics will go down next year and his stature relative to other individuals will suffer. However, his selfless acts of leadership will increase his chances of adding real hardware to his resume, represented by world championships. If his team maintains the selflessness demonstrated by Steph Curry, they could be on the verge of a dynasty.

It’s extremely hard to exhibit selfless characteristics in a world that promotes individuality and instant gratification. Whether you are sharing photos of all the great things you are doing on Instagram, posting amazing moments on Facebook or just talking to friends about recent successes, rarely do people get excited about someone that takes a step back to take a giant step forward. Rarely do people suffer minor near-term setbacks for the belief in something greater for the group going forward. Rarely does the front page of the paper or the talking heads on radio or TV promote the boring, selfless act that was really the catalyst for positive change.

Well done, Steph Curry. While many revered you for your ridiculous ball handling skills and ludicrous shooting range, hopefully more will start to mimic your selfless behavior. As you’d probably be the first to state, it was this action that truly helped propel you and your team to greater heights.

AndCo Consulting and Asset Strategies Portfolio Services Inc. Join Forces

ORLANDO, Fla. — Effective July 1, 2016, AndCo Consulting, is pleased to announce the acquisition of Asset Strategies Portfolio Services Inc., an independent consulting firm located in Novi, MI. Asset Strategies works with institutional plans by providing a full range of asset consulting services. This acquisition will increase the amount of resources available to the combined firms to service their institutional clients independently, objectively and with high conviction throughout the country. The post-acquisition firm will advise approximately $64 billion in retainer institutional client assets.

For additional information contact bryanb@bogdahngroup.com by email, or call (866) 240-7932.