Is OSU a Buy, Sell or Hold?
My alma matter has been a frequent story in the news lately. The coach has resigned and the top player won’t be coming back. So naturally what I’ve been wondering is if the program is a bargain buy yet?
Granted, it’s had some major setbacks. But, it has a great history. There should be value in the program and my season tickets at some level. Maybe they won’t grant me a good bowl trip this year, but who knows, they may surprise us all.
Would you own OSU today? And, what is even more interesting is would you have bought them six months or a year ago?
In early January, ESPN had them in their top 10 teams for 2011. Certainly that could be construed as a big buy signal from a knowledgeable analyst.
Rivals.com ranked the Buckeyes with a good recruiting class of freshmen for 2011, and the top class in the Big 10.
And what about a year ago? Who wouldn’t have wanted to own OSU going into the 2010 season? Most of the season they held one of the top two spots in the rankings, stayed within the top 10, and won a top-tier bowl.
But what if you had bought back then, what would the value be today? And what do you do today? Sell before they have a down year or two? Or hold on for the chance they surprise us all with a bounce back? When exactly was the time you should have sold, and, more importantly, did you?
Clearly, this analogy isn’t meant to be literal, but an illustration of how many investors think about stocks. And the message is probably clear: Despite what you knew about a sports program at the time, you really didn’t know enough to gamble on it going forward.
Fifteen years ago, you would have been wise to own Buckeye rival Michigan, though they have had hard times in the last several seasons. Maybe this is a good point to own them again with the momentum and excitement a new coach is bringing to the upcoming season.
But who could have known when the momentum would turn?
Which is exactly why individual stock picking is gambling. The market and corporate structure is far more complex and involves many more actors than a college sports program. At least with college student athletes the motivations are pretty cut and dry!
Investing involves being in it for the long-term, not gambling for the next year or several. Think about who we hold the most respect for in the markets and in sports: Warren Buffett, Joe Paterno. Did they achieve their status by focusing on one year in the market, one season on the field? Not likely.
It also is wise not to place all your chips on one team, but to ‘own’ them all. We had no idea what would happen with OSU football six months ago, however we do know college football is going to continue to do just fine.
But why stop at football? You could benefit from owning a little more of the sports universe. Add a little bit of an emerging sport for higher growth potential (my pick would be lacrosse). And we all know the great foreign story behind what the rest of the world knows as ‘football.’
So, as you contemplate and weigh what changes and short-term gambles you think you need to make in your portfolio, think about what may go wrong because of those variables you don’t know. And then ask yourself if it’s worthwhile to be a gambler at all, or if you would be happier spending your free time enjoying whatever it is you enjoy… perhaps a few more sporting events.
The preceding blog was originally published by the Financial Planning Association®(FPA®). To view the original blog please visit the FPA Web site.