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Stick With Your Game Plan


Aaron and I talked about the game this morning, and each of us set out to write our own newsletter.  The original plan was to meld the two to a single presentation, but as it turned out, we may not have been watching the same ball game.  (applause and laughter.)  Actually the differing viewpoints to some point make our respective conclusions even more compelling. So we decided to present both.  While not backing away at all from my own thoughts and conclusions, I believe Aaron’s perspective is both accurate and valuable as well.  Enjoy.   … Jim Denton


February 6, 2017


What can we learn from the championship game between the Atlanta Falcons and the New England Patriots? Obviously, looking at it from the Patriots’ perspective is easy: work hard, never give up, think like a champion. However, it is more instructive to look at it from the Falcons’ perspective. In case you missed the game, at the start of the fourth quarter, the Falcons were up by 19 points. They had history on their side – in the entire history of NFL playoff games, the team leading at the start of the fourth quarter won 93 times and never lost. And yet, the Falcons still did.


The Falcons offense played well during the first half, but then they got conservative in their play calling – trying not to make mistakes to protect their lead. Unfortunately for them, it also caused them to go off the field too quickly and allowed the Patriots offense to begin taking advantage of a worn down defense. Once the offense realized their mistake, they tried to fix it by becoming very aggressive. Late in the game, the Falcons were in field goal range and could have just run down the clock some by running the ball and then kicked a field goal to most likely seal away the game. Instead, they passed on two downs and lost yardage on a sack and a holding penalty. No field goal and the clock barely moved. Add to that a little bit of bad luck (Edelson’s catch!) and game over for the Falcons.


Before you think that the moral of the story is to always stay aggressive, I want to draw your attention to former University of North Carolina coach, Dean Smith, and his “four corners” offense. In a time before a shot clock, Smith would use this offense when his team was in the lead as a way to spread out his offensive players so they could easily and continually pass the ball and thus run the game clock down in a safe, conservative manner. He was very successful at it and only quit using it because the NCAA instituted a shot clock to prevent this exact play. Although he sometimes lost games, even ones in which he used the four corners offense, Coach Smith stuck with his conservative play style and was a highly successful coach.


Thus, the true moral of the story is to create a game plan which is consistent with your philosophy, and with which you are comfortable, and then stick with it. The Falcons usually play aggressively, but after getting a big lead, went conservative. Even when they tried to become aggressive again, it was too late. Coach Smith played a conservative game and it worked for him. When it comes to investing, the same thing is true. One’s portfolio is a mix of more conservative and more aggressive assets in differing ratios depending on one’s risk tolerance. Deviating from that plan too much can cause trouble. Occasionally a conservative person might tactically take a more aggressive risk like a conservative offense that attempts a long pass, but he should stay conservative for the most part. Similarly, an aggressive person might believe that the market is too high and purchase more conservative assets as a hedge (a passing team still needs to run the ball sometimes). But in the end, creating and sticking with a game plan is the best way to get long term success.


If you have any questions about your investing game plan, feel free to reach out to us. Of course, if you don’t have one at all, we’d love to help you with that too.



Aaron Anderson

Investment Analyst


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  You should discuss any choices or decisions with your financial advisor before implementing any changes to your investments.