After the summer’s heat, most of us are more than ready for fall. After all, fall brings with it the bright colors of turning leaves, cooler temperatures and—football! For football fans, it’s great fun to tailgate with friends, then go sit in the stands and root for the home team. Or, many like to gather for snacks and time with friends spent in front of the television, cheering the wins and grimacing at the losses.
You may have never considered it before, but the experience of watching your favorite football team can be a lot like watching the financial markets. After all, unexpected things can change the outcome of both activities. As Minnesota Vikings quarterback Joe Kapp observed, “A football isn’t round; you don’t always have control.” And former football coach and sports analyst Lou Holtz once said, “Life is ten percent what happens to you and ninety percent how you respond to it.” Similarly, how we respond to the unexpected in the financial markets, whether it’s a bounce or dip, can determine our long-term financial success.
Imagine yourself sitting on the edge of your seat, watching an intense football game. The punter makes a great kick, but the ball hits the ground and takes a crazy bounce in the wrong direction. In many ways, this is just like trying to predict the stock market. The financial markets, much like that unpredictable football game, can change direction in ways no one expects. You can spend hours studying stats and trends, just like a coach reviewing game footage, only to see your carefully planned “play” fall apart because of one unforeseen twist. The truth is, just as it’s nearly impossible to pick the winning team in a chaotic game, it’s equally difficult to pick “the winning stock” or perfectly time the market.
And then there are the experts, offering their predictions on which way the markets will go. They sound confident, but the short-term direction of the financial markets can throw everyone off, just like in a game where even the most seasoned commentators can’t predict an unexpected fumble or interception. Even the experts often find themselves scrambling to explain away predictions that didn’t come to pass because, like in football, the market has a way of surprising us.
Now, consider the emotions at play. Picture the biggest rivalry game of the season, where past records mean nothing and winning is the only thing that matters. Consider the intensity of Alabama vs. Auburn, Texas vs. Oklahoma, or Ohio State vs. Michigan. The stakes feel higher than ever. But it’s not just the players feeling the pressure — fans in the stands are caught up in it too, their emotions swinging wildly with each point scored, each fumble, each “Hail Mary” pass.
It’s the same in the world of investing. Emotions run high, and when the market seems to be tanking or soaring, it’s easy to get swept up in the thrill or panic of the moment. But just as a smart coach would tell you not to let emotions dictate the next play, savvy investors know that basing financial decisions on emotion is rarely a winning strategy. Emotions may add excitement to a football game, but in investing, they can lead to costly mistakes.
As you watch your big games this season, let it remind you of the ups and downs in the financial markets and the wisdom in staying focused on the long-term, rather than reacting to the emotional highs and lows of the moment. This long-term focus is a key to successful investing, providing a steady anchor in the midst of market volatility. And if you’ve got questions, we want to know! Please get in touch with your Curio team; we’re here for you.
