Breadth Thrusts & Bread Crusts: The NBA gets it - when will investors?

JC Parets
January 14, 2022

From the desk of Willie Delwiche.

It was Bucks vs Warriors in Milwaukee last night. Giannis vs Curry. A marquee January matchup for the NBA. 

The game got away from Golden State early and they were down 48-24 with about 8 minutes to go in the first half. When the final buzzer sounded, it was a 118-99 Bucks win. Curry, who has been averaging 35 minutes per game this season, was only in for 29 last night. In fact, no starter on either team played more than 30 minutes.

Turns out a blowout in January is a great time for players (even the stars) to get some rest. It's a long season and when the must-win playoff games come around, coaches are going to want their players as fresh as possible.

The best strategy for success (over the longer-term) is not for the stars to stay in the game. It's for them to move to the sidelines and get ready to go again tomorrow. The NBA gets it.

Investors are encouraged to do the exact opposite all the time. They are told that regardless of the score, regardless of the prospects for victory, they need to stay in the game. Moving to the sidelines is seen as too risky. It’s a bad strategy and recipe for failure.

I disagree. When downside risks are running high, remaining fully allocated can be hard on both an investor's financial and mental health. When the odds are not in your favor, reducing exposure (even just a little) can keep an investor fresh. 

For as long as the NBA season is, our investing seasons are even longer. The ups and downs can take their toll. We are more likely to make bad decisions when we’re worn down (and these bad decisions compound just as much as good ones do).

I think the NBA is on to something. I think investors would be well-served to pay attention to its example: Stay fresh – play to win the long game.        

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