Skip to main content

McKinley Carter Receives '2023 Best Places to Work' Award from InvestmentNews

I Stock 489982076 2in 482658 edited

What a Former Executive Can Teach Us about Investor Behavior: Parallels in Patience

“Trust the process.” Those were the words uttered by newly minted Philadelphia 76ers General Manager Sam Hinkie, a career statistics analyst, in May 2013. The fledgling NBA franchise had just entered into a complete overhaul, and Hinkie made it clear that the team’s roster would be rebuilt from the ground up. He would rely almost entirely on analytics and algorithms to guide their path, ushering in a new era in team management; something that both excited and terrified nearly everyone else involved. Hinkie warned that it would take time, that there would be hardship, and that this undertaking was not for the faint of heart — but ensured everyone involved that the product would be worth the patience. He implored the Philadelphia fan base and ownership to “trust the process.”

What came in abundance over the next few years certainly tested that trust: losses — lots and lots of losses. In fact, the 76ers lost so many games, they set an NBA record for the longest losing streak in NBA history. Still, Hinkie reminded everyone involved to “trust the process,” and that the end result would be worth it.

Unfortunately, just over 30 months into his tenure, the embattled franchise owners decided they couldn’t take the “torture” anymore, and made the only choice they felt they had — they pulled the plug. The keys to the front office were handed to someone new, and Hinkie was ultimately forced out a few weeks later.

It wasn’t until this winter of the current NBA season did fans begin to see a glimpse of the cohesion and chemistry that Hinkie had alluded to almost four years ago, finally coming to fruition for the 76ers. That’s right, the pieces he put in place are beginning to pan out and show results. But because the owners couldn’t handle when times inevitably got tough, the team’s full potential will almost certainly not be realized. In fact, we may never know what could have been if those in power in Philadelphia had simply been able to “trust the process.”

Investors’ experiences in the market have the potential to play out in eerily similar fashion. Throwback to a mere 13 months ago, 2016 was tabbed by many to be the market’s breakout year. Many “experts” entered the year with hopes that the relatively flat returns of 2014 and 2015 were going to be pushed aside, and the market would reach new heights. Then came what no one saw coming: the worst January on record, then Brexit, then the realistic prospect of a Trump Presidency; each of them leaving bits of December’s projections broken in their wake.

As the year wore on, 2016 continued to give us plenty of reasons to question our trust in the process, as the media propped up each headline’s potential to send the market into a freefall. Many investors were ultimately left asking “What unforeseen geopolitical event will cause the market to move violently this week?”

But even with all those reasons for investors to question their direction, question the advice they were getting from trusted sources, and even question if they should be searching for an exit point, the end result was what most had been hoping for: positive returns. Those that weathered the storm were ultimately rewarded. It was a prime reminder of just how utterly unpredictable the market can be in the short term. So unpredictable for example, that every single Goldman Sachs analyst incorrectly predicted both the election result and the resulting market move if Trump were to win. So much for forecasting, huh?

Ultimately, whether you are a professional basketball fan or not, there is a lot to learn from both Sam Hinkie’s disciplined methodology, as well as his former employer’s inability to see the big picture. Various research consistently shows that the #1 indicator of investment performance is investor behavior. No doubt, 2016 was a wild ride, and some years may be rougher (or conversely, more pleasant) than others. However, by working with a trusted financial advisor that has a consistent, diversified methodology, and coupling that with the personal fortitude to “trust the process,” gaining the necessary (albeit uncommon) ability to look past the noise that comes with short term market moves is certainly possible.

With 2017 in full swing, you can be sure your McKinley Carter team of financial professionals is well-prepared and well-equipped to help you navigate the forces that impact your total financial picture, no matter what the year may bring.

Related Insights
Goal Post Photo copy

Moving the Goal Posts – When Will it Stop?

The S&P 500 ended the first quarter of 2023 with a solid gain as hopes for an economic “soft landing” gave confidence to investors that enough damage had been done to stock prices in 2022 and that the Federal Reserve would soon stop moving the interest rate “goal posts.” However, stock and bond markets were volatile during the period as investors wrestled with the Fed’s ongoing proclamations regarding the timing and magnitude of further interest rate hikes. Despite the biggest bank failures since the financial crisis taking place during the quarter, Fed Chair Jerome Powell maintained his hawkish position regarding inflation and the need to further tighten financial conditions to curb consumer demand for goods and services. Read more from Senior Investment Strategist Dave Nolan on his 1Q2023 market recap and what may lie ahead in the remainder of 2023.

Read More
Banner Image DPN article copy USE

2022 Was Awful for Stocks and Bonds – What Now?

Easing inflation pressures and a resolution of the fiscal turmoil in the United Kingdom fueled a strong rally in stocks and bonds early in the fourth quarter, but hawkish Fed guidance, disappointing economic data, and rising global bond yields weighed on markets in December and the S&P 500 finished the fourth quarter with only modest gains that capped the worst year for the index since 2008. Learn more about 2022, what actions we took on McKinley Carter portfolios, and our outlook for 2023.

Read More
I Stock 965435894 Stormy Seas copy 1600px

Stormy Seas – Perspective is Key

Sailing through rough seas is a frightening experience that feels like it will never end. Fortunately, rough seas eventually give way to calmer waters and a more comfortable sailing experience. Coming off strong stock performance for several years, the stock market has endured its own stormy seas this year with a significant pullback in 2022 as global economic concerns brought about by multi-decade highs in inflation, rising interest rates, and the war in Ukraine, have crushed investor optimism. We’ve experienced an unusual phenomenon this year – the simultaneous decline of stock and bond markets. Throughout the third quarter, investors’ concerns focused on global instability, rising prices and the possibility that central bank efforts to tame inflation would cause economic growth to falter. The result has been tremendous volatility in stock and bond markets. Learn more.

Read More