Reviewed by Jan 29, 2021| Updated on
Swing for the fences is a phrase that refers to the attempts to make greater gains in stock market trades with near aggressive bets. The term’s origin is found in the game of baseball, i.e. the ones who come to bat swing to reach the ball to the fences to enable them to get a home run. Likewise, investors who attempt to swing in a stock market to reach the fences assume greater risk for greater returns.
Swing for the fences sees traders or investors chase massive gains in stock market transactions by betting aggressively with high risk. The act of swinging can also refer to making large and risky decisions and aiming for high returns. The large and high risk-bearing decisions are often outside the stock markets.
Portfolio managers do not generally attempt to swing the fences for many reasons, including their legal contracts and other obligations to their clients. While managing portfolios, the managers cannot assume aggressive bets on behalf of their clients. The risk assessment and management is usually part of the agreement with the investors keeping the interests of the investors.
Portfolio managers are professionals and need to professionally manage the folios of their clients. They need to balance all the factors and attributes of investing, such as risk, return, weighing the opportunities, and possibility of losses. From a legal perspective, a portfolio manager is in a fiduciary relationship with their clients.
A portfolio manager who is trading on their own count can assume greater risk to chase aggressively high returns. However, in the case of client funds, the manager should choose investments which meet particular risk assessments, safety standards, quality standards, among the other terms of agreements with investors.
A swing for the fences attempt can be the one an individual takes, especially in an initial public offering (IPO). A potential investment in an IPO is riskier where the price is not previously traded, and returns are unknown. In comparison, established companies in the stock market can offer steady returns through dividends and appreciation in investments.