This commentary is an excerpt from our Q4 2020 Market Report, which also features world capital market performance along with the returns of stock and bond asset classes in the US and international markets during Q4 2020. Download the full report here.
Tom Brady: Defying the Odds
In January of this year there was some grumbling in the news of something we never thought would take place. February it got louder, and by March it was confirmed. Initially, it affected parts of the northeast much harder than the rest of the country. Where will it go next? Perhaps California or Las Vegas, but it certainly won’t go to the South because it’s too warm, experts pondered. Yet sure enough, by the summer it had landed in the south and quickly got to work. It wasn’t long before the people of New Orleans, the Carolinas and Atlanta started to realize what people in the northeast already knew – it is surely real.
Though it took through the summer for many people to understand the repercussions of this change, by September the second wave had begun. While many on the outside started to question its effectiveness, and the proper defense against it, the spread continued. Many began to consider: has it figured out the new system and started to mutate?
By October we started to hear of a cure, and by December one was clinched. In January shots were delivered, first in Washington D.C., then Louisiana and the Midwest. Will the rollout climax in February for us all to see? That is the Chiefs’ concern.
If you can believe it, this is not a commentary about COVID-19 but about Tom Brady, who has defied all odds and logic this past year in earning his 10th Super Bowl appearance, set to unfold February 7th when the Kansas City Chiefs face off against the Tampa Bay Buccaneers.
Let us consider in more detail what has led Tom Brady to this extraordinary point and examine the parallels between his winning strategies on the field and your winning strategies as a long-term investor.
If you want to perform at the highest level, you have to prepare at the highest level mentally.
Lesson #1: A Positive Mindset: Keeping Cool Under Pressure
In Tom Brady’s documentary “Tom vs. Time” he states: “If you want to perform at the highest level, you have to prepare at the highest level mentally.”
We often touch on the concept of EQ vs. IQ and emphasize that investing and building long-term wealth is much more about emotions than intelligence. This was tested in a material way in 2020. Global markets, as measured by the MSCI All County World Index (MSCI ACWI), fell over 30% from February to March, the fastest drop in history, only to rally by over 40% to finish the year +16.3% for 2020.
If there was ever a time when positive thinking and mental fortitude were necessary allies, it was during March of last year. If one didn’t concentrate on their EQ and instead paid attention to all the headlines from prognosticators with perceived high IQ, they were left flat footed.
Remember when Tom Brady was down 28-3 to the Falcons in Super Bowl LI (2017)? If it wasn’t for a positive mindset and an unwavering focus on the end goal, there is no way the New England Patriots would have mounted the largest comeback in Super Bowl history to win 34-28.
The same goes with stewarding one’s finances. If you surround yourself with people you trust who share an understanding and commitment to your goals, your chances of success are greatly increased.
Lesson #2: Surround Yourself With A Great Team
While Tom Brady will probably go down in NFL history as the G.O.A.T. (Greatest of All Time), he did not begin holding individual records until late in his career, mainly due to longevity. As did Michael Jordan in the NBA, Tom has always understood the power of team, surrounding himself with other great talent. Great coaches like Bill Belichick, Bruce Arians, great defensive players like Richard Seymour, Rodney Harrison and Ndamukong Suh, great offensive players like Randy Moss, Rob Gronkowski and Mike Evans, and even great kickers like Stephen Gostkowski. Without a great team it is debatable whether Tom would be as effective or celebrated a player as he is today.
The same goes with stewarding one’s finances. If you surround yourself with people you trust who share an understanding and commitment to your goals, your chances of success are greatly increased. In 2020 we doubled down on teamwork to support our client and partner community in getting through the year. That meant different things for different people at different times.
This included providing extra education through Town Hall webinars, deploying situational planning strategies, and offering much of our time and presence to simply listening.
Lesson #3: Block Out The Noise
Something I really admire about Tom Brady is that he always seems to maintain a steady equanimity, never allowing outside forces to affect his performance.
It was recently disclosed that both his mom (a cancer survivor) and his dad caught COVID-19 early in the year, with his dad being hospitalized for almost 3 weeks while he fought for his life. Was this emotionally stressful on Tom and his family? I have no doubt. But did it affect his performance? Not that I could tell.
Tom once described his cool-as-a-cucumber trick as “Ignoring the noise, the positive things people may be saying about you, or the negative things people may say about you. Just believing in yourself and not making excuses.”
This concept is extremely hard to stick to in our society with the 24/7 hammer of news, social media, and targeted advertising. There is constant “noise” trying to make you feel great about yourself or reinforce negative thoughts and behaviors.
In 2020, emotions were all over the place with COVID-19, an election, civil unrest, and a complete shift in how society interacts with one another. This is where the concept of behavioral coaching comes into play – all we can control is ourselves, or what Jonathan stresses as “controlling the controllables.”
Ah la Tom Brady, I will add that we must believe in ourselves, remain focused on our goals and avoid making excuses along the way.
Lesson #4: Have a Plan and Work The Plan
Tom Brady always has a plan. He has one for his opponents and for himself, but a big part of his plan is to read the moment and adapt at lightening speed, which means he doesn’t always win the same way. He studies the strengths and weaknesses of both him and his opponents before identifying the proper way to meet his goals.
If you study Tom Brady, he sometimes wins by throwing, other times by handing to his running backs or just controlling the ball to let his defense win the game for the team. He has a plan – to win. But the execution of that plan rests on immediate adaptability in the present moment to carry him and his team through to achieving their goals, as we have seen happen again this season.
This past year demanded that same combination of long-term focus and short-term agility as well as a level-head, in our personal and financial lives alike.
Without minimizing what has taken place, I ask the question: in planning for you and your multi-generational assets over the next 30+ years, what effect will one year really have in the long-run?
Have a plan. Work the plan. But don’t let the appearance of short-term set-backs affect your long-term ambitions.
Key Takeaway From 2020: All Visions Teach Us Lessons
History doesn’t repeat, but it often rhymes.
2020 was undoubtably a year history will remember and speak of for generations. There are lessons to be learned from all experiences in one’s life. We may not again experience the exact same events of 2020 and its effects on our financial lives, but odds are we will experience something similar in the future.
As Mark Twain stated, “History doesn’t repeat, but it often rhymes.” So, next time history rhymes, please remember these lessons:
- Have a positive mindset
- Surround yourself with a great team
- Block out the noise
- Have a plan and work the plan
This commentary is an excerpt from our Q4 2020 Market Report, which also features world capital market performance along with the returns of stock and bond asset classes in the US and international markets during Q4 2020. Sign up here to receive our quarterly market commentaries delivered right to your inbox.