Financial Professionals

Market Insights

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AJ or Andy

11/19/2009

My apologies to all those Yankee bashers who labor through my blog postings only to find my extreme affection for the 2009 World Series champions. There exist, however, many interesting corollaries between sports and investing, so let's revisit the 2009 World Series to find another one to help investors prepare for 2010. "Prepare for 2010?" Yes folks, that should be your focus right now, what's your plan and who is helping you?

After game four, the Yankees held a commanding 3 to 1 lead on their way to number 27 - all that remained was "the closeout." In game five, the young, multi talented A.J. Burnett would take the ball. For game six, the veteran Andy Pettitte. No doubt both pitchers wanted to close it out, pitch the game of the season and win the World Series, just as for next year all money managers want to outperform their benchmarks and provide their investors with superior returns.

Andy Pettitte got the job done; A.J. Burnett got the first shot and failed. Why? Too eager and intense and overthrowing. Trying too hard in a completely unfamiliar environment. The situation required the experience an old veteran would provide in game six. Over the course of his long, storied career, Pettitte had been there and knew how to close it out.

2010 looks to me somewhat similar to the situation the Yankees faced heading into game five. The liquidity, broad based rally is currently transitioning. The breadth will narrow. Not all boats will rise. Achieving performance will be much more difficult in 2010.

Look no further than the recent performance of large caps, as measured by the S&P 500 Index versus the small cap Russell 2000 Index. Last week, large caps outperformed by over 200 basis points. Large cap financials continue to outperform small cap financials. High quality is back in vogue.

Successful money management in 2010 will be the equivalent of Pettitte's game six win. A quality money manager that has "been through it" who will not "overthrow" or be too eager should outperform. The capital markets will continue to provide opportunity for investors in 2010. The key to finding them just might be the money management skills of a Pettitte versus Burnett.

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.