Content provided by Joe Porter, CLS Investment Performance Analyst
Percy Harvin signed with the Seahawks in the summer of 2013 for $67M over six years. I was excited, because when Harvin is healthy, he is one of the top wide receivers out there. With Harvin’s help, my dream of a Super Bowl Championship could become a reality.
As every football fan knows the Seahawks did win a Super Bowl, last year in fact, and I have the t-shirt to prove it. Back-to-back Super Bowls would be awesome, and with a healthy Harvin it could happen. They started the season 3-2 in one of the toughest divisions. Shortly after that, out of nowhere, the Seahawks traded Harvin to the Jets for a conditional pick. I was torn! The Seahawks paid all that money to Harvin and now, they aren’t getting much in return. Sure, Harvin was hurt most of last season and didn’t really do much to get the Seahawks to the Super Bowl, and they probably could have won it without him. Harvin is a playmaker though—a dual threat at wide receiving or running the ball.
You are probably wondering what this has to do with your portfolio. Sometimes, it is better to minimize your losses before things get out of control. As people, we are emotional and can feel attached to the funds that we pick. This makes it tough for us to sell a fund that has lost us money, in hopes that it will come back up for us to breakeven. If our funds do come back up, then we hold on in hope of making a few bucks.
This is why it is important to hire a money manager. Money managers will help take that emotion out of the process. They have a disciplined plan for buying and selling funds in order to mitigate effects on your nest egg.
Unfortunately, Harvin wasn’t a team player, just like funds that have gone down in your portfolio. When the money manager sells those poor performing funds and finds a better fund, it will help your portfolio, just like the Seahawks without Harvin. The Seahawks were in shock the first half of the first game without Harvin, but then they outscored their opponents 33-16. By trading Harvin, the Seahawks cut their losses which could put them back on track for that back-to-back Super Bowl Championship.