The National Hockey League Stanley Cup playoffs recently
concluded with the Pittsburgh Penguins capturing their second consecutive
title. As usual, I took time out to
watch a few games—more than I watched during the whole rest of the season.
I like the rapid and hard-hitting action of ice hockey. It has more speed than soccer, more
continuity of action than football, more physicality than baseball. Once you know the rules, it’s not a hard game
to follow. The only part of the sixty
minutes playing time that still leaves me scratching my head is end-of-the-game
strategy. Without exception, if a team
is behind by one or even two goals, in the last two or three minutes of the
game the coach of that team will take his goalie out in favor of putting an
extra “attacker” on the ice, an additional offensive player to try and score a
goal to even the tally.
I suppose the strategy makes sense because a loss gains the
team nothing in the regular season and in the playoffs costs a precious game or
even spells elimination from playoff contention. But I think the strategy merits a little more
careful consideration. Pulling the
goalie leaves a team without its last line of defense, somebody standing in
front of the goal to block the other team’s shots. And even with that extra attacker on the ice,
at least one of the players has to play back a little more cautiously to guard
against an opponent heading down the ice to score into an unguarded net. So by my math, the team with the extra
attacker really only gains the equivalent of about 50% of an extra attacker.
Now a coach will look at that and say, “It’s worth the
chance in order to tie the score.” But I
look at the odds of success. And the
odds—as measured by actual experience—are abysmal. In the games I watched, I lost count of how
many times I saw a coach pull the goalie.
Not once did the team doing so actually net a goal to even the
score. However, I counted at least four
times in which the opposing team cushioned its lead by scoring into the empty
net of the team with that extra attacker.
If I were the coach (and this is just one more of many
reasons I’m not in the NHL), I’d never pull the goalie.
But this is a blog about personal finance, not sports; so
what’s the point of all this?
When someone is behind on their savings, whether it be for
college tuition, retirement, or whatever, it is tempting to go all out and
invest aggressively to make up for lost time and hopefully make some big gains
to enable him to meet his goal. When a
55-year-old sees her nest empty as the last kid graduates college and suddenly
realizes that the $5000 in her 401k account is not nearly enough to begin
funding a decent retirement, she may look to strike it big with some risky
investment, or somebody’s “sure thing” that’s had great returns for the last
couple of years.
But big returns come with big risks, and trying to cram
forty years’ worth of investing into five or ten is not likely to yield the
desired results. In fact, the odds of
success are akin to those of pulling the goalie in ice hockey.
No, the best investment strategy of all is to use the power
of time. Investing even small amounts
regularly over several decades and picking solid (if not always glamorous)
investments will be like playing sixty minutes of good, solid hockey. Your odds of success are better, and you
don’t leave yourself defenseless in the last two minutes, so to speak, of the
game, the very time you can least afford to lose money.
Until next time,
Roger
“Dishonest money
dwindles away, but whoever gathers money little by little makes it grow.”
Proverbs 13:11 NIV®*
*Scripture quotations taken from the Holy Bible, New
International Version® NIV®
Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™
Used by permission.
All rights reserved worldwide.
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