Investment Lessons From Andre Agassi

At the suggestion of a friend, I’ve been listening to the audiobook version of Andre Agassi’s autobiography Open. As a casual tennis fan, I grew up watching Agassi, and while I was aware of Agassi’s style and his infamous “Image is everything” commercial, I had no idea as to his upbringing and inner torment.

One thing that stood out was Agassi’s obsession with playing perfect tennis, due primarily to his demanding and overbearing father. He always tried to make the perfect shot, even when the “good enough” shot would likely have won the point. And because perfection is unattainable, Agassi was never satisfied with his game. He constantly berated himself, regularly lost to lesser opponents, and quickly grew to resent and hate tennis.

Things changed for Agassi when he hired Brad Gilbert as his coach. Gilbert was able to convince Agassi that he didn’t need to be better than every other tennis player all the time. He just needed to be better than the single opponent he played on a particular day. Gilbert also was able to shift Agassi’s game away from always looking for the perfect shot and accepting that the good shot would work just fine. Consequently, Agassi experienced a late career (for tennis players) resurgence, climbing from being ranked No. 110 to the world to No. 6 in a single calendar year and winning multiple titles.

This story reminded me of my post from last November where I talked about not letting perfect be the enemy of the good. Particularly during turbulent times, we’re tempted to make changes to our financial plans and investment portfolios in the attempt to avoid short-term discomfort, often at the expense of long-term outcomes.

Weston Wellington at Dimensional Fund Advisors makes some similar points in his recent article “Is It Time to Sell Stocks?” While the whole article is worth a read, I wanted to highlight one theme.

Wellington writes, “The lure of successful trading strategies is seductive. If only we could find them, our portfolios would do so much better.”

He then summarizes the results of a Morningstar study that compared the performance between two types of mutual funds: one that maintains a relatively constant mix of bonds and stocks (“Balanced”) and a second that has leeway to make periodic shifts in allocations (“Tactical Asset Allocation”). [i]

Through August 31, 2021, the Balanced funds significantly outperformed the Tactical funds over 3-, 5- and 10-year periods. Morningstar concluded, “The failure of tactical asset allocation funds suggests investors should not only stay away from funds that follow tactical strategies, but they should also avoid making short term shifts between asset classes in their own portfolios.”[ii]

We’d all take heed to avoid searching for perfection in our portfolios by regularly shifting and tinkering and instead accepting the consistency of an appropriate allocation.  We may not win the 1999 French Open in dramatic fashion like Andre Agassi, but we’ll at least have given ourselves gives the best odds of getting where we want to go.

[i] As noted and sourced in the original and linked DFA Article – which I encourage folks to read - Morningstar described the risk profile of the Tactical Asset allocation as generally in line with that of Morningstar’s 50%–70% equity category. The narrower “balanced” category used here was a subset of Morningstar’s 50%–70% category that has a fairly static mix of about 60% stocks and 40% bonds

[ii] Amy C. Arnott, “Tactical Asset Allocation: Don’t Try This at Home,” Morningstar, September 20, 2021.