I started watching Man in the Arena this week — a documentary on ESPN+ about Tom Brady’s career. In the second episode, there is a great story about how Belichick made a stunning decision to cut his star safety Lawyer Milloy just days before opening day in 2003. Belichick had recently brought in Rodney Harrison from the Chargers, and he made the decision that Harrison would take over from Milloy.
Belichick’s decision had nothing to do with behavior or any off the field issues, and on the field Milloy was one of the NFL’s best players at his position. To boot, he was also the team leader in the locker room and the heart and soul of the Patriot’s defense. Tom Brady tells of how he lived just five houses down from Milloy and they were close friends. Everyone loved Milloy and he was a big part of the Patriots’ success. So it came as a complete shock to the players, the media, and it became the leading story in the NFL that week.
What happened next is such a great illustration of what Annie Duke would call “resulting”. I wrote about Duke’s framework for decision making in a recent post. Resulting is when you judge the quality of the decision based on the outcome as opposed to the logic of the decision itself. Not every good (or bad) result comes from a good (or bad) decision, but we tend to correlate outcomes with decision quality.
So the result of Belichick’s decision: Lawyer Milloy was cut on the Tuesday before the season’s first game. Milloy wasn’t unemployed long; by Thursday he was signed by the Buffalo Bills. Coincidentally, the Bills were playing the Patriots that coming Sunday. So the story line all week went something like this: the Patriots cut one of their star players and he’s now on the team they’re playing against and he’s out to prove what a mistake the decision to cut him was.
The game was in Buffalo and Bills fans were all over this Milloy story. As a Buffalo fan myself, I remember this game well (it was a very rare and fleeting moment in the sun for us). Bills fans accepted Milloy with loving and open arms and the game couldn’t have gone better for Buffalo. They crushed New England 31-0, Brady threw 4 interceptions, and Milloy played great for the Bills. If you were a sports writer, this story basically wrote itself. Milloy gets cut, gets adopted by a new team that loves him, and gets sweet revenge on the coach that abandoned him.
The post-game interviews were brutal. Cutting Milloy clearly looked like a bad decision, and the loss and the way the Patriots played were attributed (by the media) to this poor decision. Everyone was writing off the Patriots after just one bad game. Football commentator Tom Jackson actually said “the players hate their coach”.
But what I found interesting is how Belichick responded to the inevitable post-game question about why he cut Milloy. All he offered, in classic Belichick terseness:
“I’m trying to do what’s best for the football team.”
I was thinking about his comment last night and how truthful it probably was. The media wanted explanations, justifications, and they wanted Belichick to take blame for what clearly appeared to be a bad decision. But Belichick was probably explaining what he really felt: he tries to make decisions that are best for the team. The results over time prove out the merit of those collection of decisions, but in the short term they are a random walk, and I think Belichick’s detachment to the result of this one decision shows how much he understands this reality.
Professional football is very much about capital allocation. Football organizations have a certain amount of money to spend on a finite amount of roster slots, and their job is to build the best roster they can within the confines of those resources. And for the past two decades, no one does it better than New England. The decision to cut Milloy (whether it was correct or not) was simply one of many capital allocation decisions that get made along the way. Belichick made the decision that he thought most effectively used the resources at his disposal to give his team the best chance to win.
What I think the post-game emotional media frenzy missed is how much the decision said about Belichick’s mindset. He wasn’t concerned about what anyone else thought. He didn’t care what the media thought or even what his own players thought. He didn’t care who agreed or disagreed with him. He simplified everything down to first principles. His sole reason for the decision he made was it was best for the team. This might sound obvious (what coach wouldn’t do what’s best for his team?) but the reality is decisions often get influenced by outside and competing incentives. These distracting forces lead to clouded judgment to the point where the decision maker loses sight of what he or she is really trying to accomplish.
I also got the feeling from listening to his comment that he didn’t actually place all that much emphasis on the result of the decision at that time. He didn’t care about the short-term. He offered no apologies; no mea culpa. I think he understood that this was a bad result in just one game, and not to read too much into it. He has done a great job throughout his career of not placing much emphasis on any one game. The media hyperventilates about short-term results. This happens in sports, it happens in business, and it happens in the stock market. Humans are emotional.
Years ago I wrote a post called Market Truisms and Quarterback Controversies — after a blowout loss to Kansas City in 2014, Belichick was famously asked about whether or not Brady should still be the quarterback (Brady has won 4 Super Bowls since that question was asked). All Belichick said after that game was “on to Cincinnati” (i.e. time to focus on the next game). He separates results from decisions, and he doesn’t place much emphasis on any one given outcome.
I have a friend who thinks Belichick would make a fantastic investor. A big part of his success as a football coach is also what is needed to succeed in investing: he has no career risk, he doesn’t let himself get emotional about short-term results, and he focused on making one good decision at a time. And I also think he understands the role that luck plays in results, especially in the short run, and not to get too excited or too down about those results.
His monotone demeanor with the media has always been a Belichick trademark, but perhaps that’s a purposeful strategy to approach the game with equanimity instead of excitement and emotion. Maybe that helps him make better decisions.
I think this is a useful framework to reflect on. Focus solely on what you’re trying to accomplish. Make decisions based on what you think will best help you accomplish that goal. Don’t let outside influences and the noise of the world influence your thought process.
Buffett is very similar in this regard. He never made decisions based on what his partners or investors would think; he was willing to make decisions that he knew might look strange or be questioned by the media, or perhaps might even look foolish in the short run. He’s perfectly happy to watch from the sidelines if tech stocks are flying high that he doesn’t understand. I recently was reading about an investment he made in Amazon bonds during the dot com bust in the early 2000’s. He spoke very highly of Bezos at that time, and even suggested that Amazon would have a bright future (which is why he felt the bonds were safe and mispriced). But he never bought the stock. And as far as I can tell, it hasn’t really bothered him that he’s missed it. He certainly views it as a mistake (I’m still perplexed why he doesn’t invest in it now). But Buffett has no envy, no fear of missing out, no emotion over bad outcomes, and he doesn’t manage capital to my expectations or anyone else’s. I was so impressed (even though I may have disagreed) with his decision making last year during the depths of the pandemic. Everyone second guessed his decision to not buy stocks, not buyback Berkshire at cheap prices, not do a big acquisition. He didn’t concern himself with what other people thought he should or shouldn’t do. He simply tries to do what he thinks is best for Berkshire, and that means attempting to string together a sequence of sensible decisions, one at a time.
The mental framework of focusing on compounding sensible decisions is what Belichick and Buffett both have in common. Neither man suffers from social proof tendency, and it’s a very rare human trait to be able to have such detachment from the world’s opinions and what is considered conventional and acceptable. To be able to be in the arena and yet remain completely insulated from the noise and the emotion that can distract you from quality decision making is the skill that I admire most about both of these GOATs. It’s a behavioral edge that exists in both of their respective professions, and it’s one that is so hard for their competitors to copy.
I covered these points above, but here are my notes I took last night after watching episode 2. It’s a fun show worth checking out if you have ESPN+.
Happy New Year!
Post script: The Patriots recovered by getting the last laugh on the Bills. In what I (as a long suffering Bills fan) could only describe as some kind of dark twist of fate that Belichick most likely orchestrated, the Patriots beat the Bills 31-0 on the last game of the regular season, the same exact score of their opening day loss. It was an almost poetic exclamation point on a season that started by everyone writing off the team as a disaster. The Pats finished the year 14-2 and won their second (of six) Super Bowls.
John Huber is the founder of Saber Capital Management, LLC. Saber is the general partner and manager of an investment fund modeled after the original Buffett partnerships. Saber’s strategy is to make very carefully selected investments in undervalued stocks of great businesses.
John can be reached at john@sabercapitalmgt.com.