Building a championship team—on the field and in a portfolio

By David Wismer

There are many similarities between building a championship baseball team and a winning investment portfolio: finding the right balance between offense and defense, assembling a diversified roster of high-performing assets, and remaining adaptable and resilient through inevitable challenges.

I was reminded of this last week, when Major League Baseball’s 2026 trade deadline arrived on August 3, following several days of aggressive roster moves.

Contending teams sought the final pieces that could strengthen a postseason run, while struggling clubs traded established players for prospects who might contribute in future seasons.

Although the approaches were very different, each organization faced the same basic challenge: evaluating its current roster, identifying strengths and weaknesses, and deciding which changes offered the best opportunity for long-term success.

How the MLB trade deadline played out

Several teams took markedly different approaches to the trade deadline, influenced by their results this season, the resources available to them, and their determination to improve.

The Los Angeles Dodgers demonstrated how an already powerful team can continually look for ways to improve. The two-time defending champions acquired arguably the top pitcher in the game, Tarik Skubal, from the Detroit Tigers in the deadline’s biggest blockbuster. The Dodgers paid a significant prospect price for Skubal among other deadline moves, reinforcing the organization’s commitment to maximizing its current championship window.

The New York Mets took an entirely different approach. With their season falling well short of expectations, they traded many veterans and brought 11 prospects into the organization, including several highly regarded young players. The trades weakened the current roster, but they allowed the Mets to replenish their development system and create additional options for reshaping the team in future years.

The American League East provided a sharp contrast in approaches. The red-hot Boston Red Sox, who recently won 32 of 37 games, made a bold move by acquiring catcher Adley Rutschman from the Baltimore Orioles in exchange for a substantial prospect package. Division-leading Tampa Bay added catcher Liam Hicks, whose power should complement the Rays’ lineup, as well as pitcher Freddy Peralta from the Mets. The New York Yankees added two productive hitters—Luis García Jr. and Heliot Ramos—but did not address their needs at catcher and shortstop or reinforce an overworked bullpen.

The difference was especially noticeable because both Boston and Tampa Bay strengthened a key position the Yankees left unresolved. While many Yankees fans were sorely disappointed, the team did promote top shortstop prospect George Lombard Jr. to the major league roster, and he has already impressed in his first few games.

Having the right “team” for an investment portfolio

Let’s dive a little deeper into the analogy between MLB team-building efforts and sound portfolio construction—especially diversification and having a roster of “players” that fulfill specific roles.

I like the perspective of a financial adviser who had a stellar baseball career, reaching the professional minor leagues. He uses this experience to explain his role with clients:

“I tell the client they are like the owner of a professional sports team. It is their hard-earned money and, ultimately, they have the authority and the responsibility to make the decisions.

“But they have hired me as their general manager and head coach. It is my job to do everything in my power to put together a sound plan of action and to assemble the highest-quality coordinators, assistant coaches, and players to help their team achieve consistent success. For example, I conduct an extensive evaluation and selection process of third-party money managers on behalf of my clients. I will recommend the use of those that fit the investment needs for a specific client. I think this simple analogy of assembling a great team makes a lot of sense to people.”

This concept is especially relevant in a year like 2026, when markets face both macroeconomic headwinds and tailwinds and significant uncertainty. Seven months into the year, we’ve seen notable bouts of volatility, particularly in the NASDAQ Composite, alongside a mixed economic picture, soaring energy costs, war in the Middle East, a new Federal Reserve chair, and an investment environment heavily influenced by the shakeout of the AI trade.

Financial advisers we have interviewed for Proactive Advisor Magazine frequently talk about combining actively managed strategies with different performance characteristics that are designed to work 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, I 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, founder 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 respond 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 objectives.