Friday 500: Five Hundred Words on Finance Every Friday

Friday 500: Five Hundred Words on Finance Every Friday

How Football Compares to Finance

There are still arguments going on whether Dan Campbell, head coach of the Detroit Lions, should have kicked field goals in the NFC Championship against the eventual Super Bowl runner-up, San Francisco 49ers. Itis easy to speculate after the fact—hindsight is always 20/20. Campbell no doubt relied on probabilities and statistics to guide his game day decisions .But it wasn’t all on his shoulders: the execution of a play matters as much, if not more, than the play call itself. Detroit ended up dropping a 4thdown pass and squandering two other attempts to gain first downs in lieu of a kicking field goals for a possible 3 points. They took a risk, and it didn’t pay off.

Kyle Shanahan made a similar decision for the 49ers on Super Bowl Sunday and went for it on fourth down. George Kittle, their All-Pro tight end made a play and they achieved the first down, later scoring a touchdown. They ended up losing the game, but no one is really talking about that specific play, because they made it.  We often want to criticize what we think are poor decisions based on the outcome vs. the process and plan.  Outcomes will vary, but that doesn’t mean what you decided was the wrong decision.

Investing and planning for retirement are not too far off from making a play call on 4th down to either go for it or kick afield goal. There are risks to both sides of this equation and there are payoffs to either side of it as well.  If you go to kick a field goal and miss, not only do you not get any points on the board, you also lose eight yards of field. If you go for it and get it, your drive continues and you hope to put a touchdown on the board worth double the points of the field goal. If you invest in a risky strategy and it pays off, you lookback and it appears as if you made the right call, but if that investment went poorly, then you feel like you made the wrong call.

Analytics are starting to drive the sport similar to what the book “Money Ball” described in the Oakland A’s strategy of building a team in the 90s.  They had the lowest pay roll in baseball but somehow competed and it was all because of analytics and finding the largest value in players. Football has more moving parts so its more difficult to analyze than baseball and that goes for some investments as well. 

We can’t predict where exactly the markets are going to go, but we can plan and prepare and design portfolios so that whatever the markets do, we have a play call set up to take advantage. 

—Billy Voyles, Founder & President of Fundamental Wealth Designs

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