Football is Life

There are very few situations in personal finance (and life in general) that I cannot explain through the lens of football. And so, as I was watching Lamar Jackson’s pass fall victim to a greedy defender last weekend, I reflected on the difference between a poor decision and a poor outcome, and how this matters not just in football, but in our finances.

At the time of this writing, the stock market is down, way down for the year. Does that mean that we were all dupes when we invested at its peak? Probably not. Investing is a classic example of how you cannot always judge the quality of a decision by its outcome.

In the closing seconds of a football game on the very last play, a quarterback may survey the secondary, see an opportunity and execute the perfect throw into the end zone. Unfortunately, the receiver has mitts for hands and drops the pass. Game lost. It goes into the record book as a stat against the quarterback. But did he really make a bad decision? No, the decision was fine; it’s just that the outcome was not.

As with investing (sometimes). If you have a long term goal such as retirement and your portfolio has lost value, did you make an unwise decision to invest? Just because the outcome right now is poor, likely your decision was perfectly sound. Internalizing that fact should give you the fortitude to ride out the current volatile market.

Then again, sometimes a QB will pitch a ball directly into the hands of a defender leaving fans and commentators scratching their heads and wondering, “WTF was he thinking?” Is that you? Did you put money at risk that you need in the short term because the market was hot? Or less dramatically, did you overestimate your tolerance for risk? In this case, the misery that you are feeling because of the bad outcome may be quite justified because it was, indeed, a poor decision for which you are now paying the consequences.

But like our proverbial football player, you go back to the film room. You study the tape, you recognize where you made your error, and you come out and play again next Sunday with a better game plan.