Irrational Sports Fans and Investors
My family and I are Padres fans, and we enjoy watching games and following the team throughout the season. Of course, being a San Diego sports fan can sometimes be a frustrating experience, considering our city has yet to win a major professional sports championship. There have been plenty of hopeful seasons for both the Padres and the Chargers (back when they were still in San Diego — my fandom ended when they left), but none have ultimately delivered a title.
What always stands out to me, though, is the emotional roller coaster sports fans willingly put themselves through. I’m reminded of this every time I hear the endless stream of reactions from season to season, game to game, or even pitch to pitch.
Occasionally, I’ll browse online comments or listen to local sports radio, and it’s amazing to hear what fans say after a win or loss. One week the team is terrible, the next week they’re championship contenders, and then the cycle repeats — all based on the most recent emotional experience. That same love-hate relationship often extends to players, managers, coaches, and the entire organization. When we zoom out and take a longer-term perspective, things are usually neither as good nor as bad as our emotions make them seem in the moment.
I enjoy reading books about human behavior and decision-making, and I’ve come to realize just how irrational people can be in the way they think and act. That awareness has encouraged me to occasionally step back and ask myself whether I’m approaching a given situation rationally or emotionally.
I think it’s safe to say that both sports fans and investors can behave irrationally at times, often heavily influenced by recent headlines, outcomes, and emotions.
The psychological and emotional factors we all experience undoubtedly influence our decision-making. The field of Behavioral Economics studies these tendencies and the many ways our minds can distort reality or lead us astray. Unfortunately, these instincts can often hurt us more than help us.
One example is the concept of loss aversion — the idea that the pain of losing something feels roughly twice as powerful as the pleasure of gaining something equivalent. For investors, a 20% gain in a portfolio feels good, but a 20% decline often feels far worse emotionally.
As a sports fan, emotions can actually enhance the experience when kept in perspective. They create excitement, anticipation, disappointment, and memorable moments — all of which tend to fade with time. In investing, however, emotions often lead us away from wise long-term decisions rather than toward them.
The following quotes come to mind:
“Emotion is one of the investor's greatest enemies.” — Howard Marks
“It’s an easy game, if you can control your emotions.” — Warren Buffett
“The investor’s chief problem — and even his worst enemy — is likely to be himself.” — Benjamin Graham
“It (baseball) breaks your heart. It is designed to break your heart.” — A. Bartlett Giamatti
So whether you’re a sports fan or an investor, it’s important to recognize the role emotions can play in your decisions and reactions. After the dust settles, a clearer and more rational perspective usually emerges.
