As much as I just want to gush about the New England Patriots victory in Super Bowl XXXVI, I realize we're in a financial forum here and I'll try to tone down my blissful rhetoric. As a long suffering sports fan from Massachusetts (think Boston Red Sox, the curse of the Bambino), relating the biggest football win in our region's history to investing isn't the first thing that comes to mind... but it's a close third or fourth. Believe it or not, there are a few things investors can take away from this year's Super Bowl.
History is on our side
One of the problems with being a Patriots fan is the lack of history, the lack of precedent for winning. We had made it to the Super Bowl twice before. But in 1986 we were shellacked by the Chicago Bears, 46-10. Then in 1997, the Green Bay Packers rolled over us. Until Sunday night, the Patriots hadn't won a championship in their 43-year history.
As far as baseball and football were concerned, I grew up expecting to lose. (Unfortunately, I did not become a basketball fan until my 20s and missed out on the great Celtics' teams I could have enjoyed as a teenager.) After all, I've been psychologically scarred by debacles like the '86 Red Sox -- two outs, two strikes away from winning the World Series before it all unraveled. I've been stuck with such a fatalistic attitude that even with the Pats up 17-3 going into the fourth quarter of last night's game, I was sure they were going to lose. To me, the possibility of a Patriots' world championship would have had to take on such an apocryphal twist that I wasn't prepared to think about it. The world is still intact today, though, which only goes to prove that the end will come when the Red Sox finally win the World Series again.
But this same kind of defeatist thinking can really do us in as investors, too. I can imagine how hard it would be if you came of age, say, in the bear market of 1973-74 (or worse, the Great Depression). When you see your portfolio seemingly washing down the drain, especially if you're just starting out, why wouldn't you think that you're a failure as an investor? That you're better off playing it safe with CDs or even just a regular savings account?
The past couple of years have been hard on investors. And if you just started putting money in stocks at the peak of the tech bubble, you're probably hurting right now. You're probably thinking it's fourth and ten and the game is already over. But investing isn't a finite game like football. You certainly have more than four quarters to make your comeback, and history is on your side.
On average, stocks have returned just about 11% per year since 1926. Despite a world war, depression, recessions, near nuclear annihilation, assassinations, conflicts near and far, flair pants, and the Pacer and Gremlin both being introduced as automobiles, the stock market has continued its upward direction. There have been big bumps along the road for sure, but history shows that with some fortitude and determination, and most importantly a long time horizon, stocks are the best place to grow your savings.
Sometimes, it is all about team
The stock market can be daunting. Sometimes, I admit, I feel I have no business even stepping onto the same playing field with the pros. How can I compete? My mind isn't very analytical. I don't schmooze with company CEOs, or have a crack research staff at my disposal (actually, that's not true -- I do have Motley Fool Select). The last thing I want to be doing is trying to figure out how to do a discounted cash flow analysis in my spare time.
But I do have the Fool community at my disposal. And by community, I mean the writers who write for this site, and all the people who contribute to the wealth of information on our discussion boards. Most of them will always be faceless, known only by a funny online nickname like DeliLama, Sandman, or FutileFrance. But when you compile the intellectual discourse among all those funny names, it's quite a body of work, and out of the voices of many comes the power to enact change -- be it through a grassroots movement to support Regulation Full Disclosure or to just improve our own financial situations through better investments, or getting out of debt, or living below our means. All those things are made possible, or at least a little easier, when you're part of The Motley Fool Community team.
So, too, was it with the Super Bowl champion Patriots team this year. If you're a sports fan not from New England, name three players on this team. You probably couldn't until last night. Their three-time Pro Bowl quarterback was nearly killed on the field in week two and replaced by a second-year player who'd completed a total of three NFL passes until he took over as the team's starter. In fact, the team was assembled with so many retreads and nobodies that it had the second-lowest payroll in the NFL.
But this is where the importance of team comes in. They grew together and got better all season long -- so much so that they stuck it too the NFL's best team last night. The Rams were loaded with star players and poised, they thought, for a dynasty. The Patriots beat the odds when the odds were stacked so against them that last night's victory will go down as one of the greatest in NFL history.
How much easier is it for us as investors when the odds are in our favor? History has shown us that we can win simply by setting aside savings on a regular basis, and stuffing our savings into an index fund. And if we want to go beyond that and beat the market, we've got the resources of each other -- thousands of Fools -- at our disposal. That's a winning combination.
And that's enough of a pep talk for today. And enough of one guy drawing investment comparisons to his team's improbable run for glory. I'm going to review the videotape to make sure the Patriots really won. Then I'm going to hit the Gimme My Sports discussion board and crow some more about them there. If I start talking about the Red Sox making it to the World Series this year, just shoot me.
Bob Bobala still has not stopped hyperventilating. The Motley Fool is investors writing for investors.