Swing for the Fences

To "swing for the fences" means to attempt to earn large returns in the stock market with bold bets. The term "swing for the fences" has its origins in baseball. Batters who swing for the fences are trying to hit the ball over the fence to score a home run. Similarly, investors who "swing for the fences" are attempting to obtain large returns, often in exchange for significant risk.

In addition to making risky investments, the expression "swing for the fences" can also refer to making of a large and potentially risky business decisions outside of the public markets. For example, a CEO might “swing for the fences” and try to acquire his company's biggest competitor.

An example of a swing for fences could be investing a significant portion of an individual portfolio in a hot new initial public offering or IPO. By nature IPOs are often riskier than investing in more established, blue-chip companies, with a consistent history of returns, dividends, proven management, and a leading industry position.

While many IPOs have the potential to earn a home-run for investors with industry-changing technologies or exciting new business models, their history of profits are often inconsistent (or non-existent, in the case of many young software companies). Investing an outsized portion of one’s portfolio in an IPO could occasionally produce significant returns but more often than not could introduce undue risk for the investor.

Portfolio management is the art and science of balancing an investment mix to adhere to specific objectives and policies for asset allocation for individuals and institutions. Portfolio managers balance risk against performance, determining strengths, weaknesses, opportunities and threats to achieve an optimal outcome. Portfolio managers rarely swing for the fences, particularly if managing funds for client(s). If the manager is simply trading his or her own account, he or she might be willing to take on greater risk; however, when acting as a fiduciary for another party, a portfolio manager is ethically bound to act in the other's best interests. This generally means cultivating a diverse mix of investments across asset classes and balancing debt versus equity, domestic versus international, growth versus safety, and many additional trade-offs encountered in the attempt to maximize return at a given appetite for risk without placing too much emphasis on high-reward bets.