Monday Morning Quarterback

Decisions, Decisions

With lifestyle changes and the kids getting older, yet not fully involved in activities, I’ve had more time to catch up on reading.  While my free time evaporated with a six and three-year old, I was still buying books routinely.  I still wonder if I’ll ever be able to catch up on reading them all.

I like to read because quite often it helps my sanity because I find myself asking, “am I the only person that thinks this way.”  When I recently read “Thinking in Bets” by Annie Duke, it was refreshing to see familiar thoughts.  On many occasions throughout my career I felt dejected by outcomes of my investment decisions and shuddered at the thought of clients thinking how ignorant I was.  The reality is that you can make the best decision through comprehensive and thorough analysis and still be wrong.  We can’t control the outcomes of our decisions.   While as humans we want that guaranteed outcome, it doesn’t exist.  It’s why phrases such as “sure bet” and “can’t lose” are easily peddled on the masses.   

If I were to ask you to list your best and worst decision over the last decade, you would undoubtedly concentrate on the best and worst outcomes.  It’s a natural reaction that we all do.  The term “Monday Morning Quarterback” exemplifies this tendency.   In the sports world you constantly hear, “if they would have thrown the out-route to Johnson we win the game.”   In reality, the draw play with the running back was the best decision – it simply didn’t work.

One example I feel best illustrates this concept is choosing to drive under the influence.  In this scenario, we know it is a horrible decision to drive intoxicated – regardless of whether you make it home safely.  Why do we not apply the same mentality to investing?  Judicially diversifying your assets across fundamentally sound securities yet under-performing an abstract index, doesn’t mean it was a bad decision.  Vice versa, dumping all your assets in a penny stock and doubling your money doesn’t imply sound judgement.  

It’s a harsh world with an unknown future.  For all we know, the taxi we decide to take us home rather than driving under the influence could get in an accident.  However, there is no denying the decision was the right one – the outcome was not.