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When a Loss Turns Into A Win

Sports and investing have a lot in common. The goal of this blog is to apply some of the lessons that we have witnessed in the sports world to the world of investing. The first piece will feature a story from the sport of boxing.

On January 11th, 1997 Vince Phillips faced off against Romallis Ellis in a key welterweight fight that would be televised by HBO. Neither fighter had ever held a world title but each was knocking on the door step of a title fight.

This bout in particular was big for both men. Each had overcome adversity both inside and outside the ring. Their respective careers were nearing the end and neither could afford a loss. A loss for either would theoretically send them to the back of the line in the welterweight division and the dreams of getting a title shot would all but evaporate.

The fight itself was very competitive through the duration of the ten scheduled rounds. Both men clearly knew what was on the line and both had their moments of success throughout the fight. As a matter of fact both probably put up their best professional efforts to date on this night.

The bout would go the full ten round distance and three judges would determine the winner. Not surprisingly given the nature of the contest the judges were split in their verdict. One scored it 97-93 for Ellis and another 96-94 for Phillips. The third judge sided with a 97-93 for Ellis giving him a split decision victory.

In the immediate aftermath Phillips was distraught. He gave a teary eyed interview to reporters stating his claim for why he should have gotten the verdict. But overcoming this loss would be tough and Phillips seemed resigned to the realization that his career as a serious contender may have come to an end.

But something very unusual came of this moment for Phillips. There was an up and coming superstar from Australia named Kostya Tszyu who held a world title belt. Tszyu’s team wanted a big spotlight for him in America and needed the right opponent who could make their guy look good. They weren’t interested in a challenge but instead a showcase that could help build Tszyu up for a super fight with potentially one of boxing’s stars of the era in Oscar De La Hoya.

And guess who got the call to with the offer to fight Tszyu? That challenger was Vince Phillips. Why? Well he was believed to be on the down side of his career and exploitable. Tszyu’s team saw him on HBO and thought he was the perfect cannon fodder to make their guy into a household name in boxing.

The rest is history. Four months after his teary eyed interview Phillips pulled off a dramatic upset knocking Tszyu out in the tenth round to become a world champion. Phillips’ life turned around instantly and he would go on to make several title defenses.

If Phillips had been declared the winner against Ellis well frankly he is not seen as vulnerable to Tszyu’s team and never gets that shot at Tszyu.

There is no way to sugarcoat the fact that 2022 was a brutal year in both the equity and bond markets. Emotionally looking at those year end statements for some could be tough. But here is something to keep in mind. Many people are in the same boat and taking emotions out of it there may be opportunities given what happened in the past year that may not otherwise have been available.

This may be as good a time as ever to talk to a financial professional. Financial professionals can take an objective look at your plan and offer guidance to achieving your long term financial goals. While 2022 might have been a tough year for many there may be opportunities presented going into 2023 that were not necessarily as attractive in prior years. And this is something a financial professional can talk about with you based on your individual situation.

Just where could we find some of these opportunities? Well one place to look is real estate which was recently hot in what was certainly a seller’s market but has seen a decline since prices peaked in the spring of 2022. Buyers could now be finding more opportunities to buy homes at a discount from the prices they were seeing as recently as six months ago.

Who remembers the stock market decline of 2008-2009? Who also remembers someone who panicked and sold out of the market? Those who were savvy not only stayed in but added to their holdings. They were well rewarded long term for seeing that opportunity and staying the course.

Oh and what happened to Romallis Ellis? Well he did get a title shot but had to move up in weight for that opportunity. It wasn’t as good an opportunity as he hoped though as he was badly undersized and thoroughly beaten a very talented fighter in Raul Marquez. That loss basically ended Ellis’ career.

Sometimes losses ultimately present better opportunities than wins. This is true both on sports and in investing. Take the case of welterweight fight between Vince Phillips and Romallis Ellis in January of 1997. The loser that night ended up in the end being the big winner.