After enduring a winter of almost daily gloom and doom headlines on the global financial crisis, the return of Major League Baseball this month brought with it a sense of optimism, opportunity for the year ahead, new beginnings, and hope, regardless of our favorite team’s past performance.

Sounds like something the economy and financial markets could use right about now. In honor of the young baseball season, we’re conducting our annual review using baseball terms to illustrate some key issues to think about when reviewing your investment portfolio and making decisions for the future.

• Foul ball: Every investor will have investments that do not work out as planned – a foul ball, if you will. In those instances, you need to do what a good batter does: shrug it off, tap your batting helmet, rub some dirt together on your hands and step up for the next pitch.  This is especially relevant to the markets we face today.

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• Sacrifice fly: In investing, this is tax-loss harvesting. You take a loss, just as a batter does getting an out with a pop fly to the outfield, but just as a runner on base can move up, and possibly score, you can use it to improve your overall portfolio (or tax) position in the process.

• Caught looking: In investing, this is what happens when you try to time the market. You risk getting “caught looking” not even making an effort when the market goes through similar short – but often powerful – rally such as the one we witnessed in March.

• Early shower: Just as in baseball when an ace pitcher loses focus and gets pulled from the game — hence the early shower — in investor can lose focus on his or her goals, abandoning a long-term investment plan, and missing opportunities. One suggestion to avoid an “early shower,” is to keep enough cash or cash equivalent investments on hand to meet contingencies regardless of market conditions.

• Seventh inning stretch: This is when investors do their periodic portfolio review to make sure it remains well-positioned with their goals and their plan, or it’s in need of “rally caps.”

• Staying in the game: Many changes can occur over the course of nine innings, and in investing it’s important to understand the time horizon is equally important. Historically, over the long term the value of an investment in equities increases dramatically compared to an investment in fixed income securities.

• Extra-base hit: There are investors who concentrate their portfolios in seemingly conservative, slow-growth industries, such as utilities – essentially going for “walks” and “singles.” This can make a lot of sense for a portion of your portfolio but investors who want to have the chance for extra-base hits will need to have some faster-growth industries, such as technology stocks in their portfolios. 

• On-deck hitter: Just as the next batter gets ready to bat, an investor should have an on-deck list of potential investments to add to his or her portfolio. This should consist of a well-researched and thought-out shopping list of potential positions to add to your portfolio, if you find yourself with extra cash or sell an investment that is not working as you had expected. Keep it at the ready at all times, just as an on-deck hitter comes out even when there are already two outs in an inning. 

• Brushback: A Major League Baseball pitcher throwing a 96 mile-per-hour pitch close enough to a batter have him step back is pretty scary. Same thing with the fears investors frequently face in the financial markets or the economy. These brushbacks often tempt us to move too far off the plate and, subsequently, make big changes to our investment plan that could cause a strikeout — likely the “caught looking” type. The rational player, like the rational investor, is someone who considers all available information in the decision-making process.

Now that we have the terminology straight, let’s go out and “root, root, root for the home team.”

Dean A. Junkans is chief Investment Officer for Wells Fargo’s Private Bank and Erik Davidson is managing director of Investments for Wells Fargo’s Western Region.