One of the great things about being a New York Yankees fan is that their games are always on TV. I catch almost as many ballgames living in Atlanta as I did before I left New York five years ago.
Watching a Yankee game the other night, I realized that I wasn’t just watching a baseball game; I was watching a microcosm of the United States. Just watch a ballgame and you’ll see our challenges as well as what makes us great.
There are obvious similarities between the nation and the Yankees. They both share proud pasts, and they both spend a lot of money. They both operate in extremely competitive environments: The United States has to compete with China and other growing economies, while the Yankees have to deal with the American League East. They both had a rough 2008 — the Yankees failed to make the playoffs for the first time since 1994, and the U.S economy almost had a catastrophic meltdown — followed by upswings in 2009 (the U.S. recession officially ended in 2009, and the Yankees won the World Series).
But the similarities go much deeper. While watching the game, I realized that each Yankee represents something special about our country.
Joe Girardi, the Yankees’ manager, has a nearly impossible job. The public second-guesses all of his decisions, and there is no way he can make everybody happy. Most people in their right mind would have zero interest in such a heavily scrutinized, high-pressure job. Girardi is clearly the Barack Obama of the Yankees. I don’t think anyone regards either as a master tactician, but someone’s got to steer the ship. Yankee fans and Americans should always remember that one man can’t have all the answers, and it’s unfair to expect perfection from either of these two.
Brian Cashman, the Yankees general manager, represents Ben Bernanke and the U.S. Federal Reserve. Both have shown that they are willing to spend their way out of hard times and that they don’t view failure as an option. While Cashman seems to have learned his lesson from overspending on some disastrous free agents — hopefully the Federal Reserve’s latest round of financial stimulus has a happier ending than Carl Pavano — it is still too early to say whether Bernanke has learned from past experience. Investors can only hope that Bernanke will know when the time is right to turn off the money spigot and tighten the Fed’s monetary policy.
Derek Jeter and Jorge Posada are the country’s aging baby boomer population (sorry Yankee fans, but you should have seen that coming), and they represent the Social Security and pension shortfalls we now confront. These shortfalls are coming due because of promises made a long time ago, in a different environment. At 36 and 39 respectively, Jeter and Posada are not actual baby boomers, but they are senior citizens in Major League Baseball, where players typically peak in their late 20s. The Yankees now pay these veteran players for their past performance; while Jeter’s performance has been mediocre at best this year, Posada’s has been atrocious. Recently, he was nearly cut from the team. The money spent on these players does not threaten to bankrupt the Yankees, but the funds could have been used more effectively on younger, more talented players. Just as the country needs to make difficult decisions about reforming Social Security and pensions, the Yankees will also need to learn how to say no to their aging veterans.
CC Sabathia, the Yankees’ mountain of an ace starting pitcher, represents the country’s Medicare and Medicaid problems. While Sabathia lost weight over the offseason, he is currently listed at 290 pounds. Every time I watch him pitch, I find myself thinking similar thoughts to those I have when considering Medicare and Medicaid: “Boy, those medical bills are gonna be huge in the future.” The cost of government-provided health care continues to spiral out of control, and with our aging population, things will only get worse unless there are major changes to our country’s health care structure. Similarly, while Sabathia is still ready and able, it’s hard to imagine a man of his size staying healthy for the duration of the seven-year contract he signed with the Yankees. (Of course, not every overweight pitcher is a disaster waiting to happen. For example, the portly David Wells pitched for 21 years, so anything is possible.)
Often misunderstood, certainly overpaid, but still quite valuable, Alex Rodriguez stands in for Wall Street, the financial engine of the United States. The Yankees wouldn’t be serious contenders without A-Rod, and America needs Wall Street in order to succeed. We love to hate excessive pay, but on some level we all realize that this is capitalism at work. If the Yankees did not offer to pay A-Rod $27.5 million per year, another team would. And when a Wall Street investment banker receives a huge bonus for overseeing a deal, it is simply the system functioning the way it should. If an investment bank tried to tamp down on compensation, their best and brightest would quickly be gone, only to re-appear at a bank that offered to meet their compensation demands. As long as large corporations are willing to pay the lucrative fees that Wall Street commands, and as long as baseball team owners are willing to pay higher and higher salaries, nothing will change.
Mariano Rivera represents the U.S. Treasury bond. When times are tough and a game is on the line, Rivera has an unparalleled track record of getting the job done. The Yankees have relied exclusively on him to finish games for over a decade, with excellent results. Similarly, when times are tough in the global economy, investors continue to rely on U.S. Treasury bonds as a safe haven. Even as Rivera ages — he is 41 years old — and the U.S. dollar declines, they are still the gold standards. Of course, Rivera will not be around forever, and it’s not guaranteed that investors will always flock to Treasury bonds in the future either.
Frustrating, messy, and unpredictable, A.J. Burnett represents the country’s energy policy. One day it seems that we’re trying to move to renewable energy. The next, it’s “drill, baby, drill.” Then we’re going to frack our way to a shale gas revolution. If you think our energy policies are confusing, try watching Burnett pitch. We may never fully commit to one source of energy, and Burnett may never figure out how to pitch consistently. At least we can hope he has a better year this year than last year, when he was statistically one of the worst starting pitchers in baseball.
Brett Gardner and Nick Swisher’s seemingly endless patience and refusal to swing the bat represent the political gridlock we see between the Republican and Democratic parties in Washington. Gardner saw the most pitches of any player in 2010, and Swisher can say the same for 2008. But with both players off to slow starts this year, many Yankee fans would like for them to change their approach. In the same way that major league hitters must periodically tweak their approaches in order to avoid becoming predictable to opposing pitchers, our political parties in Washington clearly need to change their approaches in order to make the hard decisions necessary for this country to succeed.
When I watch Robinson Cano and Curtis Granderson play for the Yankees, I find myself asking the same question that I ask when I consider investing in Facebook, LinkedIn, or the other tech companies that the financial media have breathlessly hyped lately: “Am I watching the beginnings of something big here?” While Cano has been a Yankee for several years, he has improved steadily in that time. Only recently has it become clear that we may be watching not only an All Star, but a potential Hall of Famer. And Granderson has been a revelation in his second season with the Yankees. After making adjustments late last season at the plate, he has become one of the best hitters in baseball. But are we watching men who will revolutionize the sport? Will Facebook and other social media websites be so dominant in the future that we won’t be able to live without them? The same way we would advise investors to stay rational and never get emotionally caught up in the heart-pounding hype of a new investment, I have to assume that none of the current Yankees, including Cano and Granderson, are the second coming of Babe Ruth. To expect that would be to set myself up for disappointment.
Lastly (and my favorite), the parallels between Joba Chamberlain and the U.S. real estate market are uncanny. I am starting to think this is no coincidence. Consider the facts: In 2007 (Chamberlain’s first year as a Yankee), both looked like can’t-miss prospects. Chamberlain seemed to be a sure thing, the same way many investors viewed real estate. But 2008 was a disaster. The real estate market crashed and Joba moved from the bullpen to the starting rotation in the middle of the year, a very rare and risky move, which ended poorly. Since then, things have not improved for the real estate market or for Joba, both gradually getting worse with no real reason to feel optimistic about the future.
At this point, real estate investors and Joba Chamberlain fans are used to disappointment. Some say that in order for the real estate market to recover, we need more government intervention; others say that banks should have to shoulder the load. I’m starting to think that the real estate market won’t recover until Joba loses some weight and rediscovers his fastball.
Posted by Paul Jacobs, CFP®, EA
One of the great things about being a New York Yankees fan is that their games are always on TV. I catch almost as many ballgames living in Atlanta as I did before I left New York five years ago.
Watching a Yankee game the other night, I realized that I wasn’t just watching a baseball game; I was watching a microcosm of the United States. Just watch a ballgame and you’ll see our challenges as well as what makes us great.
There are obvious similarities between the nation and the Yankees. They both share proud pasts, and they both spend a lot of money. They both operate in extremely competitive environments: The United States has to compete with China and other growing economies, while the Yankees have to deal with the American League East. They both had a rough 2008 — the Yankees failed to make the playoffs for the first time since 1994, and the U.S economy almost had a catastrophic meltdown — followed by upswings in 2009 (the U.S. recession officially ended in 2009, and the Yankees won the World Series).
But the similarities go much deeper. While watching the game, I realized that each Yankee represents something special about our country.
Joe Girardi, the Yankees’ manager, has a nearly impossible job. The public second-guesses all of his decisions, and there is no way he can make everybody happy. Most people in their right mind would have zero interest in such a heavily scrutinized, high-pressure job. Girardi is clearly the Barack Obama of the Yankees. I don’t think anyone regards either as a master tactician, but someone’s got to steer the ship. Yankee fans and Americans should always remember that one man can’t have all the answers, and it’s unfair to expect perfection from either of these two.
Brian Cashman, the Yankees general manager, represents Ben Bernanke and the U.S. Federal Reserve. Both have shown that they are willing to spend their way out of hard times and that they don’t view failure as an option. While Cashman seems to have learned his lesson from overspending on some disastrous free agents — hopefully the Federal Reserve’s latest round of financial stimulus has a happier ending than Carl Pavano — it is still too early to say whether Bernanke has learned from past experience. Investors can only hope that Bernanke will know when the time is right to turn off the money spigot and tighten the Fed’s monetary policy.
Derek Jeter and Jorge Posada are the country’s aging baby boomer population (sorry Yankee fans, but you should have seen that coming), and they represent the Social Security and pension shortfalls we now confront. These shortfalls are coming due because of promises made a long time ago, in a different environment. At 36 and 39 respectively, Jeter and Posada are not actual baby boomers, but they are senior citizens in Major League Baseball, where players typically peak in their late 20s. The Yankees now pay these veteran players for their past performance; while Jeter’s performance has been mediocre at best this year, Posada’s has been atrocious. Recently, he was nearly cut from the team. The money spent on these players does not threaten to bankrupt the Yankees, but the funds could have been used more effectively on younger, more talented players. Just as the country needs to make difficult decisions about reforming Social Security and pensions, the Yankees will also need to learn how to say no to their aging veterans.
CC Sabathia, the Yankees’ mountain of an ace starting pitcher, represents the country’s Medicare and Medicaid problems. While Sabathia lost weight over the offseason, he is currently listed at 290 pounds. Every time I watch him pitch, I find myself thinking similar thoughts to those I have when considering Medicare and Medicaid: “Boy, those medical bills are gonna be huge in the future.” The cost of government-provided health care continues to spiral out of control, and with our aging population, things will only get worse unless there are major changes to our country’s health care structure. Similarly, while Sabathia is still ready and able, it’s hard to imagine a man of his size staying healthy for the duration of the seven-year contract he signed with the Yankees. (Of course, not every overweight pitcher is a disaster waiting to happen. For example, the portly David Wells pitched for 21 years, so anything is possible.)
Often misunderstood, certainly overpaid, but still quite valuable, Alex Rodriguez stands in for Wall Street, the financial engine of the United States. The Yankees wouldn’t be serious contenders without A-Rod, and America needs Wall Street in order to succeed. We love to hate excessive pay, but on some level we all realize that this is capitalism at work. If the Yankees did not offer to pay A-Rod $27.5 million per year, another team would. And when a Wall Street investment banker receives a huge bonus for overseeing a deal, it is simply the system functioning the way it should. If an investment bank tried to tamp down on compensation, their best and brightest would quickly be gone, only to re-appear at a bank that offered to meet their compensation demands. As long as large corporations are willing to pay the lucrative fees that Wall Street commands, and as long as baseball team owners are willing to pay higher and higher salaries, nothing will change.
Mariano Rivera represents the U.S. Treasury bond. When times are tough and a game is on the line, Rivera has an unparalleled track record of getting the job done. The Yankees have relied exclusively on him to finish games for over a decade, with excellent results. Similarly, when times are tough in the global economy, investors continue to rely on U.S. Treasury bonds as a safe haven. Even as Rivera ages — he is 41 years old — and the U.S. dollar declines, they are still the gold standards. Of course, Rivera will not be around forever, and it’s not guaranteed that investors will always flock to Treasury bonds in the future either.
Frustrating, messy, and unpredictable, A.J. Burnett represents the country’s energy policy. One day it seems that we’re trying to move to renewable energy. The next, it’s “drill, baby, drill.” Then we’re going to frack our way to a shale gas revolution. If you think our energy policies are confusing, try watching Burnett pitch. We may never fully commit to one source of energy, and Burnett may never figure out how to pitch consistently. At least we can hope he has a better year this year than last year, when he was statistically one of the worst starting pitchers in baseball.
Brett Gardner and Nick Swisher’s seemingly endless patience and refusal to swing the bat represent the political gridlock we see between the Republican and Democratic parties in Washington. Gardner saw the most pitches of any player in 2010, and Swisher can say the same for 2008. But with both players off to slow starts this year, many Yankee fans would like for them to change their approach. In the same way that major league hitters must periodically tweak their approaches in order to avoid becoming predictable to opposing pitchers, our political parties in Washington clearly need to change their approaches in order to make the hard decisions necessary for this country to succeed.
When I watch Robinson Cano and Curtis Granderson play for the Yankees, I find myself asking the same question that I ask when I consider investing in Facebook, LinkedIn, or the other tech companies that the financial media have breathlessly hyped lately: “Am I watching the beginnings of something big here?” While Cano has been a Yankee for several years, he has improved steadily in that time. Only recently has it become clear that we may be watching not only an All Star, but a potential Hall of Famer. And Granderson has been a revelation in his second season with the Yankees. After making adjustments late last season at the plate, he has become one of the best hitters in baseball. But are we watching men who will revolutionize the sport? Will Facebook and other social media websites be so dominant in the future that we won’t be able to live without them? The same way we would advise investors to stay rational and never get emotionally caught up in the heart-pounding hype of a new investment, I have to assume that none of the current Yankees, including Cano and Granderson, are the second coming of Babe Ruth. To expect that would be to set myself up for disappointment.
Lastly (and my favorite), the parallels between Joba Chamberlain and the U.S. real estate market are uncanny. I am starting to think this is no coincidence. Consider the facts: In 2007 (Chamberlain’s first year as a Yankee), both looked like can’t-miss prospects. Chamberlain seemed to be a sure thing, the same way many investors viewed real estate. But 2008 was a disaster. The real estate market crashed and Joba moved from the bullpen to the starting rotation in the middle of the year, a very rare and risky move, which ended poorly. Since then, things have not improved for the real estate market or for Joba, both gradually getting worse with no real reason to feel optimistic about the future.
At this point, real estate investors and Joba Chamberlain fans are used to disappointment. Some say that in order for the real estate market to recover, we need more government intervention; others say that banks should have to shoulder the load. I’m starting to think that the real estate market won’t recover until Joba loses some weight and rediscovers his fastball.
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