Pulling the goalie is a hockey reference. In a 1931 hockey match, Boston Bruins coach Art Ross trailed the Montreal Canadians 1-0. With a minute to play, Ross pulled his goalie out of the game and inserted an extra attacker. The game ended without any additional goals scored, but Art Ross is given credit for the aggressive coaching move. Today, the move is used all the time, but generally with just a minute or less left in a match.
Well, Asness and Brown did the math on the maneuver. They found that pulling the goalie was indeed the right move, but coaches weren’t nearly aggressive enough. They saw that, if a team is down by one goal, the coach should pull the goalie at the six-minute mark. If a team is down by two, it should be the 11-minute mark.
Crazy? Perhaps. Pulling the goalie increases the odds that the other team could score by four times! But (and this is a big but) the team only loses a little when the other team scores. They were already losing. Losing by two or three or four is still a loss. So, not much lost.
But at the same time, we’ve almost doubled our chance of scoring because of the extra attacker. The math says it’s the right decision. The math says that hockey coaches are way too conservative.
“First, coaches are not actually rewarded for winning. They are rewarded for being perceived as good coaches.
“The second reason coaches shy away from actions with short-term risk is that sins of commission are far more obvious than sins of omission.”
Did they do everything possible versus holding back and losing? Math (the correct decision) takes a back seat to how our actions look…how others perceive them.
This is precisely the reason we fail to reach our goals.
We keep the goalie in the net for extra defense. For safety. Because, according to the people you hang out with, it’s the right thing to do
Take the job with benefits. Select the college major that could get you a job versus something you truly love. Never launch the business because people will call you crazy. We are making decisions based on what we think will be socially acceptable or offer the least amount of risk.
This is bad math.
I left an executive technology position in 1992. It was a great job. I was making six figures. Had benefits. When I left that job to start a business, you can imagine the scrutiny. My friends and family thought I was crazy. They thought I was risking so much. And they said this to my face. I can only imagine what they said when I wasn’t around.
My belief was (and still is) that there is way more risk working for a company. Where you don’t have control over what the company does. Or how and when they give out benefits. Working for someone else almost always puts a cap on your earning potential and overall freedom.
So, I did the math. The math said leave, while every “sensible” person said stay.
The math worked out well for me, the company grew to over $100M, we never brought in outside funding and when the company was acquired in 2007, team had an excellent equity event. The company is now over $300 Million in sales and 90% of my original employees still work there, 29 years after I pulled the goalie and went all in.
What is the math telling you? Is it about a job? About your significant other? About where and how you live? About the creative project you will or won’t do? About what you will and won’t say to your boss?
The worst case? People will think you are crazy. People may look down on you. They may talk about you behind your back. If things turn out ok, many will send you their resumes.
The best case? You fulfill every single one of your dreams. You win and keep winning.
The risks you think are the riskiest aren’t really risky (say that five times). The safe bets are the riskiest of all.
Time to pull the goalie!
[i] Pulling the Goalie: Hockey and Investment Implications. Clifford S. Asness AQR Capital Management, LLC Aaron Brown New York University (NYU) - Courant Institute of Mathematical Sciences; AQR Capital Management, LLC https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3132563