When the Pressure is On, Remember the Fundamentals!Submitted by Bernhardt Wealth Management on April 8th, 2019
Like some of you, I just watched the thrilling women’s NCAA basketball championship game between Baylor and Notre Dame. Spoiler alert: the Baylor women won, 82–81. But the game wasn’t decided until the last 0.3 seconds (that’s right, less than one-third of a second). Though Notre Dame was down by as much as 17 points during the course of the game, the Irish women never let up, and they came within a single free throw of winning the game and the national title.
But I think the thing that impressed me the most about both teams and their coaches—Baylor’s Kim Mulkey and Notre Dame’s Muffet McGraw—was the way they responded to pressure. Certainly, at various times in the game, every player on the court had to be feeling intense emotions. When Notre Dame was trailing badly, the players had to be thinking about how to climb back into the game—which they did. When Notre Dame was threatening to snatch the victory, the Baylor players were no doubt experiencing an intense desire to prevent their opponents from scoring again and to make points of their own—which they did.
But never once did I observe any player or either coach permit the pressure to dictate their actions. McGraw and Mulkey both continued to focus on the ebb and flow of the game, directing their players to execute as they have practiced, no doubt for hundreds of hours. And the players responded, retaining their focus on the basics: passing, dribbling, maintaining the proper defensive coverage, keeping an eye on the shot clock. Ultimately, milliseconds determined the outcome of this game between two teams of superb athletes, both coached by women who had drilled into their charges the absolute importance of attention to the fundamental principles of the game.
This caused me to think about the world of investing and the work we do with our clients. There are times in the financial markets when the pressure is on: when the markets are behaving in unexpected ways, as they often do. On those occasions when market action may create unease in some investors, they will get in touch, usually seeking reassurance that their strategies are still intact and that their portfolios will still be able to provide what they need for their various financial objectives.
And when these calls come, we typically remind our clients of the fundamentals: diversification, rebalancing when appropriate, and keeping our eyes on the long-range strategies we have in place. Just as in a championship basketball game, we cannot afford to allow the emotions of a pressure-filled moment to cause us to lose our grasp of the time-proven, empirically tested fundamentals on which we base our strategies for our clients.
When the pressure is on, the clutch players go back to their fundamentals. That is what separates them from the crowd. And that is what we do for our clients, every day.