Knowing When To Quit
Nothing tarnishes prior success like staying in the game for too long.
The markets have been going crazy. Maybe the best thing is Bitcoin reached all-time highs. Crypto is officially back.
Imagine if you had invested $10,000 three years ago.
You would have about $10,000 today.
You would be right where you started but the diamond hands would be strong. So strong that you would have lost money when inflation is factored in. You can’t always hold. Not everyone is going to make it.
Obviously, on the other side of it if you had bought Bitcoin a year ago you would be sitting pretty and would have almost tripled your investment. However, no one can bottom tick or top tick a market with the touch of a button. No one can predict the future but we can use educated hypotheses to try and predict it.
And as much as the crypto bros want you to believe, the market doesn’t always go up. Diamond hands are great but on the other side of someone holding until their hands bleed is another person making money that they can drown in. One person’s loss is another person’s gain. You can hold, hold, and hold some more until you can’t hold any longer but there is no guarantee the coin, stock, ETF, or whatever investment instrument it may be will eventually go up. There is value in knowing when to quit. Knowing when to cut your losses. Knowing when to take your winnings.
Everyone talks about timing when you enter the market but knowing when to leave is just as important. Nothing can ruin past success like remaining in the game for too long. This is not just in investing but in life too.
Nick Saban is perhaps one of my favorite coaches of all time. I am not an Alabama fan, more of an Alabama respecter and I have always respected Nick Saban. He is perhaps the greatest college football coach of all time and was still at the top of his game when he decided it was time to retire this past January. In 17 seasons, he had 206 wins, nine SEC championships, and six national titles at Alabama. He just knew how to win.
Many would say he still has a lot left in the tank. He won a National Championship just three years ago and was fresh off a College Football Playoff semifinal loss to the eventual champions, Michigan. He was still at the top of his game. So why did he decide to hang it up?
Nick Saban was 72 but you couldn’t tell. With his age, he had a different way of operating than most current college athletes, understandably so. College sports are a changing landscape with the rise of NIL. Players no longer prioritize the longevity of their careers and instead chase the most money they can receive at the given moment. It is amazing. It is incredibly common to see players who are on their third, even fourth, team. To give you an idea, one of my favorite college carousels is JT Daniels. He went to USC for two years, Georgia for two years, West Virginia for one, and finally, ended his career at Rice for one more. He had four different college football lives. He is one of many and he is just one example.
Saban saw it. He saw how it was becoming a bigger issue. He spoke on his team following the end of this past season and the outlook for next year,
"I thought we could have a hell of a team next year, and then maybe 70 or 80 percent of the players you talk to, all they want to know is two things: What assurances do I have that I'm going to play because they're thinking about transferring, and how much are you going to pay me? Our program here was always built on how much value can we create for your future and your personal development, academic success in graduating, and developing an NFL career on the field.”
There is something to be said about prioritizing short-term satisfaction, playing time and money, over long-term gain, a lengthy career in the NFL. Alabama produced 123 NFL Draft picks under Saban, more than any other program since 2009 when Saban began his career at Bama. Those 123 players have combined to make $2.26 billion during their careers. Not to mention, Alabama is projected to have four first-round picks this year alone.
Saban is successful and he knows how to make others successful. But he also knew when it was time to go. He knew when it was his time to hang it up. Too many times we see people overstay their welcome. They just can’t give it up. It certainly isn’t easy, either. For some of us, work has become a part of our identity but that is where things get dangerous. It is one way to tarnish a legacy and one way to lose money. You don’t want to overstay your welcome.
The people we admire the most all know when it is time to pass the baton, when it is time to ride off into the sunset, and when it is time to quit in a way that preserves their greatness and reputation. Nothing tarnishes prior success like staying in the game for too long.
Kobe Bryant scored 60 points, overcame a 10 point deficit with two minutes left, and hit the game-winning shot with 30 seconds left in his final game. Talk about going out on top. Tom Brady won a Super Bowl and finished his career making the playoffs. Peyton Manning won a Super Bowl and then retired after the win, and Jon Elway too. All are immortalized as being one of the greatest to ever do it. But it is not always that way.
Look at this past week, March Madness was happening. I was very excited about the tournament and looking forward to a great weekend. Until Thursday night rolled around and my weekend took a hard turn. My beloved Kentucky Wildcats lost to the Oakland Grizzlies. A team that isn’t even in Oakland, California but instead in Rochester Hills, Michigan.
Regardless, this seemed to be the final straw for many Kentucky fans with the coach, John Calipari. He has been Naismith College Coach of the Year three times and was inducted into the Basketball Hall of Fame in 2015, but the loss to Oakland marked one win in the past four years in the NCAA tournament, unacceptable by Kentucky standards. Not to mention, who eliminated them in those years, a 14-seed Oakland and a 15-seed Saint Peter’s University both in the first round. Perhaps, he is not the same coach he used to be but if this season marks his last, Kentucky fans and the college basketball community will not remember him for the good times but instead, the way he went out. Past success won’t matter, it will forever be stained by a tumultuous four years to end his run. A time that Kentucky fans will look back on with dread.
Safe to say, John Calipari didn’t know when his time was up. Knowing when to hang it up is just as important as knowing when to begin. There is talent in that. In life, some of these athletes can drive themselves into the ground not realizing their time has come to an end. Everyone does it. People do it when they have one too many drinks at the bar. People do it when they continue to invest in a dying company or collapsing stock. People do it when they become infatuated with Bitcoin forever going up.
We always talk about how you want to time the market. How you should get in right at the last moment before it goes up. How it is so important to not enter a position at highs. How knowing when it is the appropriate time to start something is so important. But none of that matters if you don’t realize when it is time to leave.
You could have gotten Bitcoin at $16,000 in November of 2020 but if you held it just two years later you would be right back where you started. Gains would have been made but not realized. Your entry point would have been great but if you embrace the ideology of it forever going up, you would be right back where you started just two years ago. Nothing else would have mattered. The world is always changing and past success won’t guarantee future success. Don’t ruin past success by present ignorance.
Appreciate you reading a rare Sunday edition of Scantron’s Newsletter.
-Scantron