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"The Circus"

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The Circus

“Fear has a greater grasp on human action than does the impressive weight of historical evidence.” 

-Professor Jeremy Siegel 


If it were easy everyone would be doing it.   

An annual tradition in our family is to go watch the Citadel Basketball team play VMI each year here in Charleston.  It's important because over the years some members of the RIM Family have coached in this game and perhaps more importantly my dad graduated from VMI in ‘76 and my brother in ‘05.  Truth told I own more Citadel Basketball gear than VMI.   

In 2015 this game was interesting.  The then Head Basketball Coach at VMI, Duggar Baucom, was being rumored to take the head coaching job at the Citadel the next year.    

If you follow Baucom’s teams you know they love to play with pace and shoot it a ton.  An opposing coach affectionately refers to it as “The Circus.”   

Watching the game from the stands was a little puzzling.  Based on the feel of the game or the eye test it didn’t feel like the typical game coached by Baucom’s teams.   

VMI was leading at the half by 4 and won the game by 10 so it was a good day but the conversation after the game is what stuck with me.  We were in the locker room talking with one of the coaches and I asked about making shots in the first half v the second.  VMI shot 27% from 3 in the first half and 50% from 3 in the second.  Overall, they shot 37% which is close to their season average.  His answer when I asked him about made shots in second half was great.  “He said they knew the numbers.  They shot poorly in the first half so they trusted the second half would be better.”   

This seems easy to see looking back at a box score or a set of data but in the heat of the current situation it's hard to stay disciplined.   

This brings me to the current cycle in the market.  As has been written here and many other places the ability to stay disciplined during turbulent markets can be your saving grace.   

Even with the recent volatility throughout 2018 we are in the middle of the longest bull market in history and since most of the readers of this memo have long horizons the data tells us not to panic during declines.  But if that were easy everyone would be doing it.   

My friend Blair DuQuesnay, CFA, CFP of Ritholtz Wealth Management wrote last week about the 800-point single day drop in the Dow Jones IA.  That seems significant until you realize it represented a 3.1% drop.  Of course, the news focused on the 800 points.  The chart below shows the folly in paying too much attention to headlines.   

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