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Happy Saturday,
Here is this week’s edition of 6-Point Saturday — financial insights to help you make smarter money decisions.
Table of Contents*
*Clickable in the online version.
Point #1 — Controversial Super Bowl Call Lesson
“One of the most controversial decisions in Super Bowl history took place in the closing seconds of Super Bowl XLIX in 2015. The Seattle Seahawks, with twenty-six seconds remaining and trailing by four points, had the ball on second down at the New England Patriots’ one-yard line. Everybody expected Seahawks coach Pete Carroll to call for a handoff to running back Marshawn Lynch. Why wouldn’t you expect that call? It was a short-yardage situation and Lynch was one of the best running backs in the NFL.
Instead, Carroll called for quarterback Russell Wilson to pass. New England intercepted the ball, winning the Super Bowl moments later. The headlines the next day were brutal:”
— IndyStar.com
“USA Today: “What on Earth Was Seattle Thinking with Worst Play Call in NFL History?”
Washington Post: “‘Worst Play-Call in Super Bowl History’ Will Forever Alter Perception of Seahawks, Patriots”
FoxSports.com: “Dumbest Call in Super Bowl History Could Be Beginning of the End for Seattle Seahawks”…
Although the matter was considered by nearly every pundit as beyond debate, a few outlying voices argued that the play choice was sound, if not brilliant. Benjamin Morris’s analysis on FiveThirtyEight.com and Brian Burke’s on Slate.com convincingly argued that the decision to throw the ball was totally defensible, invoking clock-management and end-of-game considerations. They also pointed out that an interception was an extremely unlikely outcome. (Out of sixty-six passes attempted from an opponent’s one-yard line during the season, zero had been intercepted. In the previous fifteen seasons, the interception rate in that situation was about 2%.) [Emphasis = Mine]
Those dissenting voices didn’t make a dent in the avalanche of criticism directed at Pete Carroll. Whether or not you buy into the contrarian analysis, most people didn’t want to give Carroll the credit for having thought it through, or having any reason at all for his call. That raises the question: Why did so many people so strongly believe that Pete Carroll got it so wrong?
We can sum it up in four words: the play didn’t work.”
Like this image showing all the paths in life that don’t happen—and that are available going forward—it’s worth considering a few alternate realities here that didn’t happen:
Monthly reminder about that big green tree
— #Tim Urban (#@waitbutwhy)
2:20 PM • Jun 21, 2021
“Take a moment to imagine that Wilson completed the pass for a game-winning touchdown. Wouldn’t the headlines change to “Brilliant Call” or “Seahawks Win Super Bowl on Surprise Play” or “Carroll Outsmarts Belichick”? Or imagine the pass had been incomplete and the Seahawks scored (or didn’t) on a third- or fourth-down running play. The headlines would be about those other plays. What Pete Carroll called on second down would have been ignored.
Carroll got unlucky. He had control over the quality of the play-call decision, but not over how it turned out. It was exactly because he didn’t get a favorable result that he took the heat. He called a play that had a high percentage of ending in a game-winning touchdown or an incomplete pass (which would have allowed two more plays for the Seahawks to hand off the ball to Marshawn Lynch). He made a good-quality decision that got a bad result.
Pete Carroll was a victim of our tendency to equate the quality of a decision with the quality of its outcome. Poker players have a word for this: “resulting.” When I started playing poker, more experienced players warned me about the dangers of resulting, cautioning me to resist the temptation to change my strategy just because a few hands didn’t turn out well in the short run. …”
Why are we so bad at differentiating between luck and skill? Or so uneasy with the idea that results can be impacted by factors outside our control? Many behavioral economists, including multiple Nobel Prize winners, have concluded:
“To start, our brains evolved to create certainty and order. We are uncomfortable with the idea that luck plays a significant role in our lives. We recognize the existence of luck, but we resist the idea that, despite our best efforts, things might not work out the way we want. It feels better for us to imagine the world as an orderly place, where randomness does not wreak havoc and things are perfectly predictable. We evolved to see the world that way. Creating order out of chaos has been necessary for our survival.
When our ancestors heard rustling on the savanna and a lion jumped out, making a connection between “rustling” and “lions” could save their lives on later occasions. Finding predictable connections is, literally, how our species survived. …”
It’s funny how our minds don’t always perfectly process information.
It’s why, when we view the set of 3 lines on top, the middle one looks longer:
Even though the bottom set of lines shows they’re all equally sized.
I’m not necessarily saying that Carroll’s decision to pass was the better decision.
But given that only 2% of the time the ball was intercepted, it certainly wasn’t as unsound a decision as the media and Seahawks fans made it out to be.
In probabilistic situations, like football, we have to make sure we don’t put too much weight on a single outcome.
Only after evaluating a group of decisions can we parse how much was due to skill, luck, or misfortune.
The same goes for our finances.
There are all kinds of decisions we can make that ultimately might work out okay, but weren’t prudent:
YOLO’ing into crypto: putting too much of a portfolio into crypto, and it works out
Buying a home on risky terms, yet the local housing market booms, helping mitigate your initial decision
Spending emergency funds to extend a vacation trip, but you’re able to replenish your funds before any real emergency
Not getting disability insurance when the cost/benefit suggests otherwise, and you don’t experience an injury or sickness
It’s much wiser to guard against “Resulting” by acknowledging that it’s easy to fall susceptible to it, and taking action to prevent it…the subject of Point #2.
Point #2 — 11 Tactics to Avoid Costly Mistakes
From investment portfolio decisions to major career decisions, it's important to have a number of ways to avoid ‘Resulting,’ or misattributing drivers of performance. A handful to consider both before and after major financial decisions:
Before the decision:
What would you tell a friend? Framing your situation as if it were someone else’s helps strip away emotion and clarify the essentials.
Rely on tested principles. Diversification across asset classes, industries, and countries may not be exciting, but it’s stood the test of time.
Use a checklist. Pilots still use them for a reason. For high-stakes choices, they add discipline to the process. Memorialize tested principles and past learnings in a checklist to avoid previous mistakes.
Define success upfront. Don’t let “making money” be the only measure. Did the stock increase because of your hypothesis or because of unexpected factors?
Journal your reasoning. Capture what you knew, what you didn’t, and why you acted. Memories can be fuzzy. Journaling creates a reliable record to review.
Run the “Financial Lenses” test. As we covered last week, consider best-case, base-case, and worst-case scenarios.
Do a “Pre-Mortem” analysis. Ask yourself: “Let’s assume this fails, what’s the likely reason?” This allows you to identify significant risks before they happen.
Maintain humility and an experimental mindset: Treat decisions like scientific hypotheses. You won’t always be right, but the process of testing, learning, and refining is what leads to better outcomes.
After the decision:
Avoid one-off evaluations. Don’t judge your process on a single outcome. Step back and look at patterns across multiple decisions.
Review your journal. Ask yourself: “Given what I knew at the time, was it a reasonable decision?”
Calibrate forward. Use feedback across a series of decisions to refine your approach. That’s how your process compounds into better decisions and better outcomes.
Point #3 — “Did I Invest Too Conservatively?”
“I am 58 years old with a 2.9 million dollar portfolio. 9 years ago I consulted a Vanguard advisor and he recommended that I diversify from VTI and add bond funds such as BND and BNDX. Also, that I add to my international stock fund VXUS. I did what he said to a certain extent, putting 20 percent into the bond funds instead of the 35 percent recommended and rebalancing. What bothers me is that if I just remained 100 percent stocks I would have had so much more such as 4 million dollars or more if I was 100 percent VTI. Watching this stock market go higher and higher makes me feel like diversification was a major mistake and am reluctant to add more bonds."
Well, the username checks out.
This is a perfect example of “Resulting.” While this investor made a perfectly reasonable decision to diversify, they looked at the result of a single decision and drew a misleading conclusion.
In a probabilistic environment like investing, where nothing is certain, concentrating your nest egg 100% in stocks could work out. And it obviously would have here.
But no one has a crystal ball.
At the time, diversifying was the prudent move: balancing growth with protection.
This is one reason why investment professionals don’t just measure returns. They also measure what’s called “risk-adjusted returns,” which we’ll cover next.
Point #4 — Risk-Adjusted Returns Explained
A risk-adjusted return measures how much reward you earned for the risk you took on.
The most common tool is the Sharpe Ratio, which looks at your portfolio’s return above the risk-free rate (U.S. Treasuries) divided by a measure of its price volatility.
Here’s why it matters:
A concentrated stock portfolio may post higher returns, but the price swings can be enormous.
A diversified mix may deliver more normal returns, but with far less volatility.
On a risk-adjusted basis, the diversified portfolio may come out ahead.
Of course, there are limits. Volatility isn’t a perfect definition of risk. But the concept is useful: returns alone don’t tell the full story.
The bottom line: Judging a single investment solely by the outcome is like judging Pete Carroll’s Super Bowl playcalling only by the interception. Risk-adjusted returns remind us to evaluate the process and risks, not just isolated results.
Point #5 — Quotes of the Week
Continuing the “Resulting” theme, which of these is your favorite?
Making money through an early lucky trade is the worst way to win. The bad habits that it reinforces will lead to a lifetime of losses.
— #Naval (#@naval)
2:34 AM • Jan 6, 2018
"The correctness of a decision can’t be judged from the outcome. Nevertheless, that's how people assess it. A good decision is one that’s optimal at the time it’s made, when the future is by definition unknown."
— Howard Marks
— #Investment Wisdom (#@InvestingCanons)
3:58 AM • Jul 30, 2025
“Past success always seems easier than it was because you now know how the story ends, and you can’t unremember what you know today when trying to remember how you felt in the past.”
Point #6 — My Question of the Week
Think back to a financial decision you labeled as ‘good’ or ‘bad.’ If you strip away the outcome, how good was your process?
What are your thoughts on journaling your next decision so you can remind yourself it was a reasonable choice given what you knew?
Reply to let me know! I read every response.
Thanks for reading — I hope you found a helpful idea or two.
I’ll see you next Saturday with more.
Have a great weekend,
Benjamin Daniel, CFP®
Founder, Money Wisdom
P.S. Want to take control of your money, stop stressing about your expenses, & feel confident about your financial future? There are 2 ways I can help you:
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Disclaimer:
This material is not investment or tax advice. No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading this material can be accepted by the publisher.
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