Tom Hanks brought Jimmy Dugan to life as one of the most memorable movie characters of all time in A League of Their Own. As a former star professional player who fell from grace and fought personal demons with alcohol, his famous line was “There’s no crying in baseball!” The job of managing the Rockford Peaches was a reminder of how far he had fallen. He had a lot of other great quotes, quips, locker room speeches (and non-speaking record-setting performances) that are difficult to tie into the world of investing. One aspect of his story that does apply to personal investing involves setting expectations. When he was hired as a manager in the All-American Girls Professional Baseball League, he was expected to be a draw for fans. Instead he showed up to the dugout intoxicated and slept through most of the games initially. When that was addressed, his response was, “It was made very clear to me what I'm supposed to do here. I smile, wave my little hat... I did that, so when do I get paid?” Clearly he and the owner were not on the same page.
That is true time and again with investing and our expectations. The news will tell you what the stock market has done over the past year, but for the vast majority of investors, owning the stock market would be taking on way too much risk. In exchange, owning a diversified portfolio can offer the benefits of some protection when the market comes down as it inevitably does. Take for example a growth and income objective that has a target allocation of 65% stocks, 35% bonds. Is it realistic to expect a 9% annual return after cost? Historically the stock market has returned roughly 9% on average while taking on more risk than a 65/35 portfolio so probably not. Being on the same page with your advisor and communicating those expectations are vital to a successful relationship. It is important to work with somebody who understands what you are looking to accomplish and tells you if he or she can help. When a client or an advisor do not set realistic expectations for a relationship, you might end up in a Jimmy Dugan situation. That is great for an entertaining movie storyline, but not so much in real life!
If you haven’t experienced the magic of Jimmy Dugan, here is the “no crying in baseball” scene. Fair warning, he uses a few choice words.