The Writers Coin

I’m standing at the plate a few weeks ago facing a really tough left-handed pitcher (I bat left handed), and I’m telling myself to keep my feet still because I’m bailing a little bit towards first base. This pitcher is tall, throws hard, and has a bit of a sidearm delivery.

For the non-baseball fans out there, every pitch this guy throws looks like it’s coming right at me, which is an uncomfortable feeling.

So I’m mentally telling myself to just stay closed and do the right thing mechanically—that if I get hit, I get hit. You can’t be a good hitter if you’re scared.

Which was working—I started to feel comfortable up there.

The problem was the pitch was right at my knee. Down I went, face right into the dirt. My whole leg went numb and pain flooded through me.

I was done for the day—there was no way I could keep playing. This was the second game of a HOT doubleheader. The sun was bearing down on us, the temperature had been pushing 90, and I felt like I had sun poisoning (which I did actually get) from being out there so long.

And then I get hit in the knee and my leg goes numb.

So I’m laying on the ground thinking I am out of this game. I mean, I can’t even feel my leg.

But baseball players know better—we’ve been through this type of thing many a times. So I sat up, pushed off my hands and got to my feet, and started limping down to first (“Don’t rub it!”).

Feeling slowly started to creep back into my knee and my leg. The pain started to chill out a little bit. I could walk.

The coach came over to first and asked if I was OK. I waved him off like it was nothing, “It’s nothing, I’m fine.”

I took a lead off of first hoping the next batter would take a pitch or two so I could regroup. The knee starting to swell a little.

Why You Should Care About that Unnecessarily Detailed Baseball Story

Much like my last baseball story (about paying attention), this one also has more general lessons we can all learn from. This one is all about the timing of a decision. Most of us like to deconstruct how we make a decision, the things we weigh on either side to finally choose something over something else, etc. Some of us like to use spreadsheets to make a decision, which can be helpful.

I want to talk about when we make a decision.

And if there’s something baseball and having a baby has taught me, it’s that you don’t make a decision when you’re in a crisis. Sometimes you’re forced to do it, but ideally you push it back.

Whether it’s getting hit in the knee and you’re laying on the ground, or you’re up at 3:19am holding a screaming baby that seems to hate you more than a poopy diaper.

These would qualify as “crises” and I don’t recommend you make a decision here. Wait until these have passed and your mind is clear.

The goal is to pick a time when your mind is in the cleanest, most neutral state when you do make a decision. I’m sure you can rattle off a bunch of times you’ve made a decision while in a crisis. I know I can:

• Saying something you regret when you’re in a fight with someone (You are such a baby)
• Buying something on impulse when you’re feeling bad about something (I need this so I can be happy again)
• Swearing off a friendship after that person did something really annoying (I am DONE!)
• Getting out of control at work (You are screwing me over!)

We’ve all been there—and sometimes making a decision at that time makes sense, but I still think it’s better to wait a while and clear your head. You never know how you’ll feel once the rage/pain/anger is done washing over you.

Have you had any “fastball to the knee” moments?

Image by MissChatter

Picture by Foxtongue

A few weeks ago I stumbled onto a post over at Cash Money Life about value averaging—something I had never heard of. What is value averaging? It’s similar to dollar-cost averaging, which I’ve said before I’m a big fan of. But instead of investing a fixed amount at a given time no matter what, value averaging takes the market into account. No, this isn’t “timing the market,” it’s more like “taking into consideration what the market is doing.”

Let’s say I want to contribute fully to my Roth IRA, which means I want to invest $5,000 in one year. Instead of breaking it down into five “purchases” of an index fund of $1,000, value averaging works backwards. You want to have $5,000 invested at the end of the year so you invest the first $1,000, then wait until your next buying period. If the market goes up, you invest less. If the market goes down, you invest more. At the end of the year, you’ve invested the same $5,000 but you’ve made small changes as to when you put your money into the market. It’s classic buy low, sell high.

When you compare value averaging to dollar-cost averaging, it seems silly not to at least try it and see where it takes you. DCA is kind of like investing with a blindfold on because you’re not even giving yourself a chance to buy low. And value averaging won’t get you all stressed out the way other “market timing” (it’s such a bad word these days) schemes out there will. This one combines the discipline and long-term thinking of DCA with a twist of “considering what the market is doing.”

If you want to read more about value averaging, check out this paper from the Journal of Financial and Strategic Decisions. It goes much more into the meat of it and also provides some good examples. From the paper:

As might be expected from a technique that does outperform, the higher the price variability and the longer the investment time horizon the better. Each gives value averaging the time and the opportunity to work its “magic”.

I’m not saying this would’ve helped investors this past year (very little could’ve), but over the long term it can certainly make a difference and when the markets are choppy like they are right now it makes sense to employ any additional strategy that could help improve our returns.

Hey, every little bit counts, especially these days.