Fire the Coach! | Agency Sales Magazine

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“Fire Hue Jackson!”

The calls are flooding into the airwaves of 1480AM, WHBC in Canton, Ohio. Hosts Kenny “The Roadman” Roda and Jeff “J.T.” Turk are getting an earful from frustrated and angry fans. The Cleveland Browns are again in the basement of the AFC North and the overwhelming call is to fire the coach.

The team definitely needs to shake things up and send a message, but does firing the manager or coach really have any significant effect on a team’s overall performance?

The answer is a decisive, not really.

John Charles Bradbury of Kennesaw State University published a research paper in 2015 entitled, Hired to Be Fired: The Publicity Value of Managers, which takes a deep dive into the performance impact of coaching changes. These reports, included in the paper, measured data from 1982 through 2013 in a variety of sports, including soccer, baseball, basketball, hockey and football. The results showed that, while firing a manager or coach may be an advisable public relations move, the effect on real team performance is pretty trivial.

Another study conducted by Purdue University’s Sandra Maximiano showed that, in the short-term, firing soccer coaches had a positive effect. Yet looking at results of similarly struggling teams who did not fire their coach, the two sets of data were comparable, which suggested that reversion to the mean may explain any performance bump seen by coaching changes.

Controlling Events

So why do fans constantly call for a coach’s head when performance is poor? One of the more trivial answers is, as the old saying goes, “Because you can’t fire the whole team.” We like to believe that we have control over events that are, for the most part, random, like the outcome of a few football games or, in the investment world, short-term market performance.

If a football team going through a rough patch wins a game or two after the coach is fired, it’s deemed a wise decision. If the same team continues struggling, it’s called bad luck. If short-term investment performance improves after a strategy change, we investment professionals are considered geniuses. If it doesn’t, then we were simply unlucky. The illusion of control allows us to believe that we’re in charge of things that we’re really not in charge of at all.

So why are fans calling these two radio hosts demanding a coaching change? I think it’s just an overt display of frustration. The Cleveland Browns have had the first pick in the draft for two years in a row and the fans just want someone to blame for the team’s dismally poor performance. Most coaches who get fired mid-season are leading teams that have underperformed perceived high expectations. However according to the data, it seems foolish to think firing the coach will have any substantial effect on the team’s remaining schedule.

But the grass always seems greener on the other side, doesn’t it? If you aren’t going to resist this crazy urge as devout sports fans, you should at least make a better effort when investing.

I believe investors think much like the typical angry sports fan when their investment strategy underperforms. Truth be told, there is no real perfect investment strategy, as everything has periods of underperformance, and the worst thing an investor can do is strategy-hop every time things start to get murky. Using a stock’s short-term underperformance as a reason to justify a decision to pick at the investment strategy scab is choosing the easy way out.

As an investor, if you want to succeed, you must choose an investment strategy that you truly understand and believe in. If your investment strategy is based upon strong evidence (and I hope it is!), you need to stay loyal to that strategy. That time when you start questioning your strategy is ironically probably one of the worst times to desert it. The grass may look greener, but you’re most likely better off sticking with your original investment plan and resisting that “fire the coach” urge.

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