Current market environment performance of dynamic, risk-managed investment solutions.
By David Wismer
With reports flowing in from spring training camps, and a hint of nicer weather recently in the Northeast, many people are anticipating the start of a new Major League Baseball season.
I’ve always been a huge baseball fan—whether as a player myself or a follower of a specific team.
My “fandom” goes back to about age 6, when I started collecting baseball cards and became a “Phillie Phanatic” (though that character did not yet officially exist). I still have much of my baseball card collection, carefully stored. Despite my allegiance to the Philadelphia Phillies, many of the cards I coveted most were those of the stars of the dominant New York Yankees, including Yogi Berra, Whitey Ford, Mickey Mantle, Elston Howard, and Roger Maris.
The Phillies had some great teams when I was growing up, but they never won a World Series. In fact, they played a record 77 consecutive seasons before capturing their first World Series in 1980. They are still remembered for one of baseball’s most notable collapses in 1964, blowing the pennant by losing 10 agonizing games in a row.
My family moved to the New York area the next year, where I continued to keep an eye on the Phillies but also started to follow both the Mets and the Yankees. Eventually, I “converted” to become a Yankees fan. This was not too hard to do, with the never-dull teams that included Reggie Jackson, Ron Guidry, Thurman Munson, and manager Billy Martin. The Yankees won back-to-back World Series titles in 1977 and 1978 before entering a disappointing period from 1982 to 1994. Then, in 1996, they started an amazing run, winning four World Series championships in five years under the leadership of shortstop Derek Jeter and manager Joe Torre.
Fast forward to the present-day Yankees team.
The Yankees have not won a World Series since 2009, when they beat, coincidentally, the Phillies for the championship. By Yankee fan standards, that is an inexcusably long drought. Since then, they have also had too many frustrating and short-lived playoff runs—though they did reach the World Series in 2024. That ended in disappointment, as they fell to the Los Angeles Dodgers in a 4-1 series loss.
The good news is that fan optimism is running high for this season, despite the free-agency loss of superstar Juan Soto to a record-breaking contract offered by, ironically, the New York Mets.
Constructing the right team approach
One of the main complaints about the Yankees for more than a decade has been their lack of overall balance and complementary parts.
Fans and analysts alike have voiced their displeasure with many elements of the team: “Too many right-handed batters.” “Lackluster defense with players out of their natural positions.” “Too much reliance on the bullpen.” “Too many power hitters who strike out and hit for low average.” “Poor situational and clutch hitting.”
Without going into all the details, the Yankees made several major acquisitions for this season to compensate for Soto’s loss and strengthen both their everyday lineup and pitching. One analyst’s ranking of off-season moves gave the Yankees a grade of B+. (However, the Dodgers only got stronger, earning an off-season grade of A+.)
While not all of the Yankees’ previous weaknesses appear to have been addressed, the team looks more cohesive, with the ability to win games across all disciplines. (Unfortunately, some troubling injuries to key starters have surfaced recently—keeping the team from starting the season at full strength.)
As longtime Yankees radio announcer John Sterling often emphasized, great teams always have players stepping up to support the rest of the team. If some players are playing just OK, others will rise to the occasion. A well-balanced team ensures that periods of individual inconsistency don’t hurt the overall record. Over the season, the sum of the parts matters more than any individual performance.
Having the right “team” for an investment portfolio
As I worked on this week’s article, I couldn’t help but notice the similarity between the Yankees’ team-building efforts and sound portfolio construction.
This concept is especially relevant in a year like 2025, when markets face both macroeconomic headwinds and tailwinds and significant uncertainty. Just over two full months into the year, we’ve already seen notable bouts of volatility, particularly in the NASDAQ Composite, alongside a mixed economic picture.
Financial advisers we have interviewed for Proactive Advisor Magazine frequently talk about using a combination of actively managed strategies that are meant to work together (with different performance characteristics) as a cohesive portfolio over full market cycles.
As one adviser puts it, “A cornerstone of my active management approach is offering a very wide potential combination of diversified strategies. In line with this overall risk-managed active approach, l will generally use several different noncorrelated strategies, in several different asset classes. While not every strategy ‘will fire on all cylinders’ at the same time, that is exactly the point.”
Jerry Wagner, president of Flexible Plan Investments, has often written about this same aspect of diversification. He explains, “If every strategy in a portfolio is going up or down at the same time, there is a high probability that the portfolio is not properly diversified.”
He also notes that dynamic multi-strategy diversification allows portfolios to be responsive to different market environments. By adjusting allocations based on market conditions, portfolios can lean into strategies that historically perform better in each type of environment.
For example, a dynamic, risk-managed approach can seek to do the following:
• Allocate more to trend-following, high-beta, and leveraged strategies in rising, bullish markets.
• Allocate more to inverse, leveraged inverse, or defensive-asset-class strategies in falling, bearish markets.
• Allocate more to mean-reversion or pattern-recognition strategies during sideways markets, taking advantage of volatility and market swings.
The ultimate point? As our adviser noted, when strategies are “objectively quantified” and work together within a well-diversified portfolio, “emotion and ego can be put aside for the most part, and clients can more freely allow their strategies to perform as designed, without constant second-guessing.”
For both baseball fans and investors, it’s easy to get caught up in the emotions of day-to-day action. But in the end, it’s a long season for both. All that really counts is achieving their respective end objectives.