Lawrence Peter Berra, known to baseball fans and other admirers around the world simply as Yogi, passed away on September 22, 2015. He was 90 years young.

Although his baseball achievements are legendary, Yogi’s malapropisms are as much tied to his identity as his triumphs on the diamond. Circular, redundant, and sometimes contradictory, but layered with gems of hidden insight, Mr. Berra’s quirky way of speaking life has become a fixture for no-nonsense truths.

In tribute to the late, great ballplayer-philosopher, we’re sharing investing insights through Yogi’s cherished quotes.

We miss you already, Yogi.

“It’s tough to make predictions, especially about the future.”

The world is filled with market forecasts that rarely come true. The danger is when clients base investment decisions on forecasts. Market forecasts are yet another example of noise with the potential to do more harm than good.

“Baseball is 90% mental and the other half is physical.”

One of the biggest catalysts that veer investors off course is emotion—namely, when fear and greed swing to extremes. The desire to be “in the know” or to ferret out uncertainty almost always intensifies an emotional situation. The fact of the matter is that emotionally driven investment decisions rarely end well. Investing isn’t always easy, but having a plan—and the discipline to stick to it—is one of the best ways to reach your financial goals.

“The future ain’t what it used to be.”

As the boilerplate disclaimer states, “Past performance is not a guarantee of future results.” Despite its ubiquity, very few investors heed its caution. Too often investors jump on (or off) an investment bandwagon when a fund exhibits strong trends in one direction or another, but chances are you’ve already missed out on whatever advantage you might have gained. Instead think long term and look at the big picture when making investment decisions.

“You’ve got to be very careful if you don’t know where you are going, because you might not get there.”

As any disciplined investor knows, the first step to success is to know what you’re working toward. For many people, that includes saving for retirement and paying for college and major purchases. However, in the digital age, the biggest hurdle between you and investment success is swirl. Set clear goals, have a solid plan, and keep your eye on the ball.

“We made too many wrong mistakes.”

Investing mistakes are all too easy to make, but you can right a wrong by learning from the past. Wrong mistakes are the ones repeated so often that you can extrapolate patterns, and are often rooted in behavior. While letting go of control is hard, studies have shown that investors who commit to a long-term plan through target-date funds and managed accounts can not only avoid costly investment mistakes, but can also enjoy better investment outcomes in the long run.

“A nickel ain’t worth a dime anymore.”

If every investment decision comes with a trade-off, so, too does indecision. Money that sits on the sidelines is subject to a slow deterioration by a quiet culprit called inflation. Our research found that over 30 years, an average inflation rate of 3% eroded purchasing power by more than half. Investors who stay the course do considerably better, on average, than those who engage in market-timing or trade frequently.

“In theory, there is no difference between theory and practice. But in practice, there is.”

Theory and practice often clash with each other. In theory, we’re all rational investors who make logical decisions in an efficient market. In reality, we’re rash, we chase performance, and we throw in the towel too quickly when things look dicey. Emotional discipline is often the gap that keeps average investors from realizing their long-term goals.

“It’s like déjà vu all over again.”

Like observable patterns of human behavior, market history reveals cyclical patterns. Another sell-off, another correction, another bear market, another bubble. While no investor can fully insulate themselves from the effects of a market downturn or bubble, you have an important lever in your control: how you respond to it. For most investors, that means staying the course and rebalancing, even as the herd thinks, “This time, it’s different.”

“If you can’t imitate him, don’t copy him.”

Buying a stock based on a friend’s recommendation seems innocuous, but it’s almost never a good idea. Your asset allocation strategy is not meant to get you to someone else’s finish line or get to yours with risky short-cuts. It’s meant to keep you on track for what matters most to you. Create an investment plan appropriate for your investment goals and stick with it.

 

 

Notes:

All investing is subject to risk, including the possible loss of the money you invest.

Diversification does not ensure a profit or protect against a loss.

Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the work force. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in target date funds is not guaranteed at any time, including on or after the target date.

Quotes are from Yogi Berra, 1998. The Yogi Book. New York: Workman Publishing; and Yogi Berra Quotes. Accessed September 23, 2015, at https://en.wikiquote.org/wiki/Yogi_Berra.

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