Getting Results

It’s April 18th, 1998 and the NFL draft is about to begin.  The Indianapolis Colts and the San Diego Chargers have the #1 and #2 picks, respectively. Both teams needed a quarterback and there are two leading candidates coming out of college for the job.  It was a tight race between Peyton Manning and Ryan Leaf and many professional analysts considered the choice a toss-up at best.

Ryan Leaf was a junior-year standout at Washington State University.  He averaged over 330 passing yards per game, set a conference record for touchdown passes, won a conference championship and played in the Rose Bowl.  He was considered a strong finalist for the Heisman trophy. Leaf was a perfect picture of a strong quarterback: 6’5, 240 pounds with an arm as strong as a cannon. He could take hits day in and day out.

Manning was the University of  Tennessee’s all-time leading passer. His senior year Manning led the Vols to an SEC championship and was MVP of the championship game.  He was second for the Heisman trophy and won numerous college awards including the Johnny Unitas award. But he was not overly athletic, not quick on his feet and many questioned his arm strength.

At the draft the Colts took Manning as the first pick and Leaf went as the second pick.

Peyton Manning

Most of the rest you may already know.  Leaf, to put it kindly, fizzled in the NFL.  He only started half of his first season, being replaced after a terrible showing early on.  He was eventually released by the Chargers in 2001 after a stretch of poor performance and injuries. Leaf was later picked up by Tampa Bay and Dallas, but cut by both teams by 2002.  He unexpectedly retired from the NFL at age 26.

And Manning…well.  Manning has set practically every passing record in the NFL and holds nearly every Colts franchise record (and is currently working his way through Broncos records).

So why am I writing about this?  The difference between these two quarterbacks is worth examining.  On the surface, the easy choice might have been Leaf.  He was big, strong and had impressive numbers coming out of college. But it wasn’t flash or size or strength that dictated success or failure in the NFL.  It was work ethic, determination and a knowledge of the game. One of these two athletes spent countless hours training, practicing, studying and reviewing game film. The other squandered tremendous natural abilities.  One was tall, lanky, a little bit awkward. Not too quick on his feet.  The other was a picture of athleticism.

Choose wisely.
Choose wisely.

So the next time you are evaluating an investment strategy remember Ryan Leaf.  Don’t be mistakenly dazzled by past track records, promises of low risks and high returns, glitzy marketing brochures and impressive resumes. These things do not provide strong future performance.  It’s fundamentals: owning well diversified portfolios, keeping costs down, managing taxes and managing behavior. It’s not five-star mutual funds, separate accounts, hedge funds or private investment deals. It’s not the next hot stock tip or market timing newsletter. It’s fundamentals. Fees and asset allocation are the only two factors that have been proven to predict the future returns of an investment portfolio. Let’s not forget that fact.

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