Random Performance

You may have heard of a big game happening in Atlanta on Sunday: Super Bowl LIII. (Do you remember what the Roman Numerals equate to?) The City has spent the past several weeks preparing for the estimated 150,000+ out-of-town guests to arrive, while over 1 million people are expected to attend the series of festivities leading up to the game.

This year’s match-up pits the Patriots vs. the Rams – two very different organizations. The Patriots are led by 41 year-old quarterback Tom Brady and coach Bill Belichick, who need no introduction. This organization has been the gold standard of the NFL for the last two decades, having been to 9 Super Bowls and winning 5 of them (much to the dismay of Atlantans).

On the opposite side of the field are the Los Angeles Rams, led by a 33 year-old energetic coach in Sean McVay and a 24 year-old quarterback, Jared Goff. The Rams are new to Los Angeles as of 2016, having spent the previous 20 years in St. Louis. By all accounts, a young organization in the NFL.

That’s right, the Patriots’ quarterback playing the game is 8 years older than the Rams’ head coach, and he was basically graduating high school when the Rams’ starting quarterback was born! But here they both are, playing a final 60 minutes to lift the Lombardi trophy and be crowned the champions.


If we look back at the performance of the NFL’s two leagues – the AFC and the NFC – over the last 10 years, is it any surprise that the Patriots and the Rams are playing in the Super Bowl?

The following charts show the playoff seeding of the AFC and NFC over the last 10 years, from 2009-2018. Note that it does not show how those games actually played out (i.e. #6 Atlanta beat #3 Los Angeles in 2017) because there is no final seeding after the games are played – just that the winners advance.


When looking at the NFC, what are your takeaways? Is it clear who was the best team over this decade? Atlanta has made the playoffs 5 times, but has nothing to show for it. New Orleans has 6 appearances and 1 Super Bowl victory. 40% of the time they didn’t even make the playoffs. Philadelphia has 5 appearances and 1 Super Bowl victory. 50% of the time they didn’t even make the playoffs. Green Bay has 7 appearances in the last 10 years but “only” 1 Super Bowl victory…should those odds be better? Meanwhile, the NY Giants have missed the cut on 80% of the last 10 playoffs, but they have the same number of Super Bowl victories as Seattle, New Orleans and Philadelphia.

The truth of the matter is that in hindsight, we could say that the Green Bay Packers appear to have been the cream of the crop in the NFC for much of the last 10 years. I think that is a reasonable statement. But in any given year, there was no guarantee what would happen, and certainly no accurate forecasts at the beginning of the season.

Now let’s look at the AFC. This one is a little different in that it is pretty easy to notice that the league was dominated by just a few teams. The aforementioned New England Patriots, the Denver Broncos and the Pittsburgh Steelers. In hindsight, we feel pretty good about saying, “Well, no wonder these teams were in the playoffs nearly every year and winning Super Bowls. Any fool could have predicted that.” Truth is, they might be right; but this has more to do with each of those teams having dominant, long-term quarterbacks that led their teams to victory. Tom Brady, Peyton Manning and Ben Roethlisberger are all future Hall of Famers.


Picking one of these 3 teams, you like your chances of being right. However, Pittsburgh made the playoffs just 6 out of 10 years; Denver just 5 out of 10 years. They each have 1 Super Bowl victory over this time period. (Also note that Kansas City, Indianapolis, Cincinnati, and Baltimore all have 6 playoff appearances as well).

Ah yes, the New England Patriots. 10-for-10 in playoff appearances. 5 Super Bowls played in, with 2 trophies hoisted (one will be determined on Sunday). Well, there is such a thing as periods of out-performance, and they have certainly enjoyed that over the last decade. But it is just as important to note that they had just 5 playoff appearances in their first 25 years in the league!


The same holds true in investing. Each year, there are winners and there are losers among the different asset classes around the globe. Like the AFC and NFC playoff charts above, the below chart provides no decipherable information as to where the best place to invest your money is, or when.


Source: Dimensional Fund Advisors


Anything can happen from one year to the next. If you don’t believe me, take a look at what Emerging Markets did in 2008 and 2009.

So what can we learn from all of this?

First, that past performance does not guarantee future results.

Second, that it is impossible to predict what will happen. We’re fooling ourselves into thinking we have some absolute knowledge that, in reality, is based on bias or emotion.

Third, that there can be periods of out-performance (S&P 500 from 2010-present and the Patriots over the last 20 years) relative to peers as well as periods of under-performance (S&P 500 from 2000-2009 and the Patriots of the 1970s and 1980s). However, there is no data to suggest that it is likely to persist in the future.

One thing we can all agree on: it is time for Tom Brady to retire.