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Financial Planning,Investments,Stewardship

Deciding Never To Punt

Kevin Kelley, who was recently hired by Presbyterian College, has been known as the high school football coach who never punts.  Literally.  His teams never punt the ball, almost always attempt onside kicks and two-point conversions, frequently run laterals and trick plays, and basically do all the things that conventional wisdom would say not to do.  When asked about his extremely unconventional approach, he goes back to one simple axiom – The Numbers Don’t Lie.

Most folks see Kelley’s approach as extremely risky.  How could going for it on 4th and 16 from your own 5 yard line be a statistically good move?  If the other team takes over at your 5-yard line, they have a 92% chance of scoring a touchdown.  But a punt from the 5-yard line will give them the ball on average at your 40-yard line, where they still have a 77% chance of scoring a touchdown.  So while there’s a good chance that you’ve upped their odds from 77% to 92%, if you can complete the play you give your own team a chance at scoring or at the least you would drastically reduce your opponent’s chances whenever they get the ball back.

What does all of that mean?  While counterintuitive, it’s actually statistically riskier to punt the ball than to go for it.  Punting feels safer, as does kicking the ball deep on kickoffs and much of the other conventional wisdom.  But how many times have you watched a team “play it safe” only to squander a lead or give an opponent a chance to come back and steal a win?

The same is true with our money decisions, particularly when it comes to investments.  Conventional wisdom would say if you’re “X” age then you should have “Y” amounts in stocks and “Z” amount in bonds.  Most of the thinking has to do with volatility, and how much your investments could go up or down.  And that should certainly be a factor when it comes to investment decisions.  But it never should be the only one.  Investing overly-aggressive increases the odds of a large drop over a short period of time.  On the other hand, investing overly-conservative almost guarantees a smaller gain over a longer period of time.   The numbers don’t lie.

According to Vanguard, from 1926-2020, a portfolio that is 60% stocks/40% bonds has had an average annual return of 9.1%, and during the worst year (1931) the portfolio would have lost -26.6%.  On the other hand, a portfolio that is 100% stocks would have averaged 10.3% and had a worst 1-year return of -43.1%.  If you’re investing $500,000, the increased drop (additional 16.5%) would mean losing another $82,000 (assuming it happened in year one).  However, if you’re investing over 30 years, then the additional long term average translates to a net additional increase of $2,648,630 from using the more aggressive allocation!

We can use the same principal when it comes to how much to pay for college, insurance coverages, loans, Social Security, and many other money decisions.  Too often we find ourselves being overly swayed by emotions or conventional wisdom when the numbers might tell a different story.

Where does the analogy break down?  For starters, I’d argue that while the numbers don’t lie, stewardship isn’t all about the numbers.  There are other factors involved such as emotions, relationships, and spiritual convictions.  Leveraging debt might make the most sense from a numerical standpoint, but still might not be the best move.  Running up the score might seem like the best financial strategy when God might call you to do just the opposite.

I think what we should all do, however, is to evaluate all of the risks in different money situations.  Are we being blinded by conventional wisdom?  Are we acting out of either fear or greed?  What I applaud Kevin Kelley for doing is trying to take the emotions out of emotional situations, and not being afraid to go against the grain.  The results?  His teams have won 9 state titles, including a 13-0 finish by his team last year!

Where have you decided to punt that might need some reconsidering?  Is it time to consider an onside kick somewhere?