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In Super Bowl XLIX, with just 26 seconds remaining, the Seattle Seahawks were one yard away from a potential game-winning touchdown. Instead of handing the ball to star running back Marshawn Lynch, Coach Pete Carroll opted for a pass play. The result was a game-sealing interception by Malcolm Butler of the New England Patriots. The next day’s headlines were unforgiving, labeling it the “worst call in Super Bowl history.”
While the play’s outcome was unfavorable, statistical analysis suggests the decision to pass was defensible. Out of 66 similar plays that season, none had resulted in an interception. This scenario exemplifies “outcome bias,” where decisions are judged solely on their results rather than the rationale behind them.
Applying Lessons to Investing
Investors often fall into the same trap. When markets decline or investments underperform, it’s tempting to label the decisions as poor in hindsight. This hindsight bias can lead to emotional reactions, such as withdrawing from markets during downturns or chasing trends out of fear of missing out.
At Intelligent Investing, we emphasize the importance of a sound decision-making process over short-term outcomes. This includes maintaining a diversified portfolio, automating contributions, and staying disciplined during market volatility. While markets are inherently unpredictable, adhering to a well-thought-out strategy can help mitigate the impact of unforeseen events.
Partnering for Long-Term Success
Our role as wealth managers extends beyond portfolio construction; we serve as accountability partners, helping clients navigate the emotional complexities of investing. By focusing on controllable factors and understanding the distinction between luck and skill, we guide clients toward long-term financial success.
If you’ve ever second-guessed your financial decisions, we’re here to help. At Intelligent Investing, we collaborate with you to develop a resilient strategy designed for long-term peace of mind, regardless of market headlines.
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