Pub. 8 2020 Issue 3

16 The Community Banker www.mibonline.org A FOOTBALL FAN’S GUIDE TO PORTFOLIO MANAGEMENT By Jim Reber, President and CEO of ICBA Securities KICKOFF! Guest Article A s the calendar turns to the fall, millions of Americans gear up for their favorite sport — football. Of course, we’re still trying to figure out what it will look like with this being a year unlike any other. Nonetheless, what better way to usher in the new football season than to relate common gridiron phraseology to its investment portfolio equivalent? Some of this may sound like a stretch for the sticks, but perhaps you can find a loose ball in the pileup. If so, hopefully, you can convert the takeaway into a visit to the sweet land of six. Weight room Many footballers prepare themselves for the season with frequent trips to the gym. There, they can make good use of bar- bells. Community bankers often utilize “barbells” to hedge their bets against rate movements. This strategy entails buying rough- ly equal amounts of very short-duration bonds and long-duration bonds. The definitions of “short” and “long” will vary from buyer to buyer, but in the end, the investor will be pleased with at least half of the holdings, regardless of whether rates rise or fall. Run-pass option This recent innovation of play-calling gives the quarterback the ability to decide on the fly whether to run the ball or throw downfield. In a similar sense, investors can do the same with a do-it-yourself floater. Most municipal bonds in community bank portfolios have a longer-than-average duration. Often, that is precisely the portfolio manager’s intention, as it may sync with