By: Dan Darchuck, CEO
By the time you read this article the end of 2022 will have come and gone, with any significant end of the year rally we may have hoped for having failed to materialize.
With that in mind, I would like to share a quick concept regarding what any intelligent investor’s next move should be as we now head into the new year.
This concept comes in the form of a story from the career of legendary, and recently retired, Duke basketball coach Mike Krzyzewski, also known as Coach K.
Originally named as the coach of Duke University’s basketball team in 1980, he went on to become one of the winningest college basketball coaches of all time, including winning five national titles.
If you know at least a little about Coach K, you likely remember the wins. But, what you may not know is how rough of a start he had at Duke.
During his first two seasons, the team had a combined record of 21 and 34. Diehard Duke fans were not impressed, and the athletic director and Board of Trustees were feeling the heat.
Most new university basketball coaches realize that if they’re starting from scratch, an entire team of freshmen might be a bumpy road, so as a stop gap measure they will often bring in junior college transfers to provide instant depth and maturity.
Coach K however didn’t subscribe to that philosophy. He felt strongly that such a team would always be trying to backfill those two-year positions, and would never quite develop a completely cohesive structure.
His philosophy was to take recruits straight out of high school and have them for their entire college career, during which time he would be indoctrinating them carefully within his system, creating a fully realized team over time.
The boosters and administration at Duke didn’t want to wait that long. They demanded that he make a change.
Coach K refused.
He believed so strongly in his philosophy that he absolutely refused to water it down.
It took the better part of ten seasons for Coach K’s strategy to pay off completely, but eventually it did, with the first of five national championships coming in the 1990-91 season.
Do you think Coach K and his assistants had moments of doubt along the way? You bet!
However, this bumpy beginning eventually led to Coach K’s great run, the start of his legendary status, one winning season after another.
So, what can we learn from the coach?
Early on, when his system looked like it might have wobbly legs, he refused to deter from it. He had a process, and it was well-thought out.
Even under the burden of huge adversity he stuck to his guns.
During the financial market experience we had in 2022 I heard echoes of the initial years of Coach K’s tenure at Duke. And like the coach, I know that the worst thing we can do now is to change our strategy to chase a short-term solution.
We know that being intelligent, long-term owners of great companies and other quality assets isn’t always easy. There will often be times when, in the short-term, the outcomes we want just don’t appear to be materializing.
It is then that we would be ill advised to second-guess what we know to be right. We, with you, are willing to hang tough through the short-term, because our eye is on winning the long game. We’re with you every step of the way, with our focus affixed on a long-term, disciplined strategy.
We hope that in spite of market turmoil, you had a joyful holiday season, and are now looking forward, with Greg and me, and the rest of the Topturn team, to a great and prosperous 2023.