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Turn tennis tips into investment savvy

Tennis and investment success come down to who best navigates volatility

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A powerful forehand or a booming serve are useful assets in a player's tennis arsenal—but matches aren't won simply based on power and aggressiveness.

The most-recent Wimbledon proved that, as winners Serena Williams and Andy Murray successfully combined their power with three other critical skill sets: finesse, smarts, and patience under fire.

The same holds true when it comes to managing your personal finances and investing. It takes a diverse portfolio and remaining calm during the highs and lows to come out ahead when it matters most.

"There is a deluge of data showing that portfolio managers who try to hit constant 'aces' will eventually have terrible performance years compared to peers focusing more on execution, implementation and proper due diligence," says Anthony J. Caravetta, a J.P. Morgan Private Client Advisor with Chase Private Client.

Not every point is a winner

There's nothing more disheartening during a tennis match than when players rally for eight, 10 or even 15 shots, and someone has to lose the point. In the grand scheme of things, however, despite the energy exerted to come up short in that instance, it's still just a single point. A tennis match can be made up of a couple hundred points, so players have to put small setbacks behind them and look forward.

Caravetta says he recommends a similar approach for his clients: the ones who remain the most level-headed during the ebbs and flows of the market are the ones set up best for retirement. "It's natural for investors to feel anxious during periods of uncertainty," he says. Caravetta suggests finding a financial advisor to help during short-term volatility, but “mostly to reinforce your long-term plan."

Age gracefully on the court—and in your portfolio

The best tennis players in history typically have a professional career lasting a couple decades. Managing personal investments and finances, on the other hand, require monitoring the markets for 40 years, or more.

The brash, aggressive and overconfident player in his or her late teens will, of course, look vastly different as he or she starts pushing 40. For investors, their strategy and plan don't look the same when just out of college to mid-life to retirement.

"As a tennis player's stylistic approach to the game changes with age, an investor's strategy changes over time," says Caravetta. "During peak compensation years—depending on suitability and risk tolerance—there is a higher probability he or she might desire more growth-oriented securities within portfolios versus income-producing securities."

The investor doesn't take as many chances in the years approaching retirement, similar to an aging tennis player who needs to take fewer chances in the hopes of conserving energy and playing fewer points while still winning the match.

"That same person most likely looks to become more conservative, less growth-oriented and starts to seek more income-producing portfolios … as their compensation decreases and principle protection becomes primary," Caravetta says of those approaching retirement.

These types of evaluations are critical for investors and tennis players alike. Players love monitoring the statistics to see their first-serve percentage, how well they fare volleying at the net or how many unforced errors they've hit. The same goes for investors to see how a certain growth strategy worked in one market during a certain time period but maybe not as well in another.

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  1. Asset allocation/diversification does not guarantee a profit or protect against a loss
  2. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits
  3. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

The information within this document is being provided for informational and educational purposes only. It is not intended to provide specific advice or recommendations for any individual. You should carefully consider your needs and objectives before making any decisions. For specific guidance on how this information should be applied to your situation, you should consult the appropriate financial professional.

JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal and accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.

JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB") offer investment products, which may include bank managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (JPMS), a member of FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states. 

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