Bill Belichick, Terrorists and Investment Risk

David MoonBlog

This past Sunday evening, the New England Patriots were leading the Denver Broncos by 7 points with 5:31 remaining in the third quarter. The Patriots were looking at 4th and 1, with the ball on their own 47-yard-line.

Statistically, the next play call wasn’t even a difficult decision. New England should have gone for it. A punt would likely result in a touchback, netting the Patriots only 33 yards on the punt. Even if New England had downed the ball inside the 20 yard line, the odds of the Broncos scoring were only marginally greater than if the Patriots had failed on their fourth down try and turned the ball over on the 47-yard-line.

The Patriots had converted 56 percent of their fourth down tries this season and 60 percent last year. The NFL average success rate on 4th and 3 or less is 67.2 percent over the last 3 seasons.

Bill Belichick, arguably the best coach in the NFL, chose to punt. After receiving the punt, the Broncos ran 3 plays, netting 3 yards, then punted the ball back.

New England lost the game in overtime.

Football coaches are almost like regular people. They don’t always act rationally. Even the most secure football coaches make decisions that are least likely to result in criticism rather than decisions that logically increase their odds of winning.

Professional investors and advisers do the same.

We regularly misevaluate risk, ascribing a too great of probability or severity to negative outcomes. We are often very afraid of things that are statistically unlikely, while not being concerned enough about factors that deserve attention.

Someone traveling to Europe is fearful about potential terrorist attacks. But the flight to Europe is significantly more risky than the odds of being killed in a terrorist attack. And the drive to the airport is significantly more risky than the flight itself.

In the 12 months following September 11, 2001, risk specialist Gerd Gigerenzer estimates that an additional 1,600 Americans died in automobile accidents as a result of the 18 percent decline in airline passengers.

On an annual basis, more Americans are killed in deer-vehicle collisions than by terrorists. Let’s sick the TSA on Bambi.

When forced to make risk assessments, especially when constrained by time or influenced by intense emotions, our reflexive response is to simply do what everyone else is doing. The human brain fears before it thinks.

Conventional wisdom and gut reactions are shortcuts we use when we don’t have the time or energy to employ logic. Many of those shortcuts, like flinching when we unexpectedly encounter a snake, are the result of millions of years of brain evolution. They are designed to solve survival-related problems, not modern day decisions like what stock to buy or whether to punt.


David Moon, founder and president of Moon Capital Management, may be reached at

This article originally appeared in the News Sentinel (Knoxville, TN).