Baylor Bears Football

The Baylor Bears are enjoying an excellent football season. They currently rank 9th in the polls after trouncing The University of Texas. With a record of 10-1, they’re headed to the Big 12 Championship Game for the first time in school history for a rematch against Oklahoma. Hopefully, they’ll be able to avenge their gut-wrenching loss. If they win the rest of their games and get a little help from other teams, they may find themselves in the college football playoffs.

The turnaround is astonishing, considering the team only won one game in 2017. The 2017 season was Matt Rhule’s first at Baylor. His first job was to convince the young men on his team that they were winners despite the media saying otherwise. His goal is to develop young men and recruit new players to buy into his system.  At his introductory presser, he said, “If you come to Baylor and you come to play for me, that you’re going to get loved and you’re going to get developed each and every day because that’s hard. That’s not easy. Coaches say that but they don’t always want to do that. But that’s all that we did at Temple. That’s all we’re going to do at Baylor because that’s our purpose, to spend all of our time developing our players.”[1]

The Bears were on the brink of receiving the death penalty from the NCAA before Coach Rhule arrived. In addition to replacing their former coach, Baylor also hired a new university president and an athletic director.

When Coach Rhule took over the football program, he only had 45 scholarship players on his roster out of a possible 85, so he had some work to do to convince high school players to attend Baylor.[2] Coach Rhule had seen this picture before as the head coach for the Temple Owls. In 2013 his team won 2 games and lost 10. In 2015 the Owls won 10 games for the first time since 1979. The Owls aren’t known for football, but they ranked in the top 25 during Coach Rhule’s final two seasons with the team.

Coach Rhule has a vision, plan, and a process for turning around football programs in need. He trusts his process and so do the players.  “That’s what my whole message to our players is,” Matt Rhule said. “You’ve done this because of your process, this didn’t happen tonight, it happened every morning over the last two years.”[3]

Webster’s dictionary defines the process as “a natural phenomenon marked by gradual changes that lead toward a particular result.” Gradual changes. Success at any level takes time.

What can you learn from Coach Rhule’s turnaround?

You need a plan that captures your vision and gives you a process for investment success. If your investment process works, stay with it regardless of your short-term results.  When returns are lackluster, it’s easy to ditch your plan and start over. Investors who don’t have an investment plan usually chase returns and make irrational decisions. This strategy is not a good long-term solution for creating wealth. In December 2018, investors withdrew $183 billion in mutual fund assets as the S&P 500 fell 15.7%. In January 2019, they added $23 billion as the stock market rose by 15%. Investors were reacting, not investing. When adversity strikes, your plan and process will keep you in the game.

You need goals. A financial plan will help guide you towards your investment destination. It will be your playbook for financial success. Coach Rhule and other successful coaches have a plan for everything – practices, games, travel, meals, etc. He leaves nothing to chance, and he focuses on what he can control. He can’t control the outcome of the game, nor can you control the direction of the stock market. Focus on your plan and the things you can control, like savings and spending.

Coach Rhule is not alone. He has a team of coaches, assistants, and other personnel helping his team achieve their goals. Surrounding yourself with a group of advisors will pay dividends. Relying on a financial planner, investment professional, attorney, and CPA will help you fortify your foundation.

Last, celebrate your success. The Baylor Bears are having fun and enjoying their season. It’s been a long-time coming for the players and their fans; both are enjoying the ride. You must enjoy your success, as well. It’s okay to sell a few of your winners and spend the money on yourself or loved ones.

There is still much work for Coach Rhule and Baylor Bears to do, but so far, so good!

Sic ‘em Bears!

November 27, 2019

Bill Parrott, CFP®, CKA®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

 

 

[1] https://sicem365.com/s/560/top-10-quotes-from-matt-rhules-introductory-presser, by Baylor Football, 12/2/2106

[2] https://www.espn.com/college-football/story/_/id/27969408/how-matt-rhule-charlie-brewer-rebuilt-baylor-back-big-12-contender, by Sam Khan, Jr., 10/31/2019

[3] https://www.fox44news.com/sports/matt-rhules-motto-trust-the-process-comes-to-fruition-for-baylor-football/, by Matt Roberts, 11/24/2019

Predators

According to the African Wildlife Foundation, the lion population has declined 43% in the last two decades, and approximately 23,000 remain on the continent.[1] Other animals that face extinction are the Bengal Tiger, Northern White Rhino, Clouded Leopard, Scalloped Hammerhead Shark, and the Red Wolf.[2] Sadly there are over 41,000 species on the extinction list, and another 16,000 that are considered endangered.[3] From bees to zebras, animals are disappearing at an alarming rate.

Six of the eight species of bears are on the endangered list. Polar and panda bears are considered vulnerable.[4]

Predators are needed to maintain order in the ecosystem. A world without predators sounds nice, but it causes other problems. New Zealand wants to eradicate their predators by 2050. Stoats and ferrets aren’t native to the island, and they’ve been eating the Kiwi – the bird, not the fruit – at an alarming rate.[5] The Stoat and ferret don’t have any predators.

Bulls and bears dominate the stock market. Bulls represent a rising market, bears a declining one. Bullish traders expect the market to rise while bearish traders expect it to fall. Bulls are usually more optimistic than bears.

Can the stock market survive without bears? Wouldn’t the market be better off if everybody was bullish or optimistic? I don’t think so. Bears are needed to maintain order and balance in the marketplace. I believe their job is to identify problems, poke holes in rosy forecasts and look for accounting issues in financial statements.

Citigroup publishes the Panic/Euphoria index weekly. The chart ranges from positive .6 – euphoria to negative .9 – panic, but most of the time, the readings fall between .3 and -.3. When the indicator approaches .3, the market has risen substantially, bulls are winning, and investors are feeling euphoric, so it’s due for a sell-off. Conversely, when it drops to negative .3, investors are panicking, bears are winning, and the market is due for a rebound. Last December the indicator traded below -.3 as stocks were falling and then the market went on a terror, rising more than 27% during the next seven months. When Citigroup’s index trades to extremes, the market’s ecosystem is out of balance.

Jim Chanos is a famous short seller and one of the early bears to attack Enron. The accounting didn’t add up, so he shorted the stock in late 2000.  Enron declared bankruptcy in December 2001 – a good call by Mr. Chanos.

John Hussman, Ph.D., manager of the Hussman Funds, is expecting a market loss “on the order of 60-65%” based on his analysis of current market conditions.[6] The Hussman Strategic Growth Fund (HSGFX) has a 10-year average annual return of -7.46%. A $10,000 investment in 2009 is now worth $4,599. The S&P 500 Index returned 14.3% per year over the same time frame. A $10,000 investment in the index is now worth $30,870.

Harry S. Dent, Jr. is calling for the “biggest crash ever” coming by 2020. Mr. Dent is the author of The Roaring 2000s published in 1998 and The Great Depression Ahead published in 2009. The exact opposite happened for both books. If he had reversed the order of his books, he’d be an investing legend.

I’m habitually bullish on stocks because, on average, they’ve risen three out of every four years, and they’ve generated an average annual return of 10% for the past 93 years. However, I do read bearish reports to give me a perspective on what others are thinking. Negative outlooks and forecasts keep me in check. The bearish reports force me to ask, “What am I missing?”

If there are no predators, the ecosystem will get out of balance – in nature and the markets.

Life, uh, finds a way. ~ Ian Malcolm, Jurassic Park

July 29, 2019

Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have any asset or fee minimums, and we work with anybody who needs financial help regardless of age, income, or asset level.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

 

 

 

[1] https://www.awf.org/blog/recovering-africas-lost-lion-populations, March 2, 2018 by Jimmiel Mandima

[2] https://awionline.org/content/list-endangered-species#mammals, website accessed July 29, 2019

[3] http://www.endangeredearth.com/, website accessed July 29, 2019

[4] https://seethewild.org/bear-threats/ website accessed July 30, 2019

[5] https://www.kiwisforkiwi.org/about-kiwi/threats/predators-pests/mustelids/ website accessed July 30, 2019

[6] https://www.hussmanfunds.com/comment/observations/obs190714/, John P. Hussman, Ph.D., July 14, 2019