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Don’t believe all you read or hear, and stand by your convictions

What do you say to your team to make them think differently?  On March 29, 1982 in the NCAA national championship game, legendary North Carolina men’s basketball coach Dean Smith was faced with that challenge. With his team down by one point, and only 32 seconds left in the game, Coach Smith called a timeout. Roy Williams, who was an assistant under Dean Smith at that time, experienced first-hand how thinking differently can be so empowering: “The talk that he gave in the huddle was the most inspirational talk I had ever heard in my life and it was the most confident, like that ‘we’re in great shape.  I’d much rather be in our shoes than theirs.  Isn’t this fantastic?  We get to determine who wins this game.’ They left that huddle at the end of that timeout, I knew we were going to win.”  With 17 seconds to go, a little-known freshman shooting guard named Michael Jordan knocked down what would be the winning shot to give Coach Smith his first national title.

Creating a winning mindset by thinking differently doesn’t just help teams win basketball games; it also applies to understanding the markets and how they relate to your personal financial situation.  Prior to 2008, many investors felt they were doing just fine with their portfolio. They were regaining the confidence that they lost during the “dot-com crash” of 2000-02.  The common refrain at that time was “beating the market.” The market in this case was the S&P 500 index, which represents the 500 largest companies in the US.  When the financial crisis came, those same investors faced a reality check as many watched the value of their portfolio drop by as much as 50%. The question then became, what was more important – “beating the market” or not losing 50% of their portfolio?  The answers were different depending upon the investor’s circumstances. Many who were retired no longer had the willingness nor the ability to be heavily invested in one market and take on the risk of substantial losses.  Many who were in their 30s and 40s had the ability but questioned their willingness to take on extreme risks.