Big Red eating his breakfast

It’s in our national DNA to root for the underdog.  Doing so gives us hope against all odds and the courage to dream of accomplishing the impossible.  Our country, in fact, started as one of the biggest underdogs of all time.  Today, we lead the world in many respects, producing extraordinary benefits for our countrymen as well as our global neighbors.  Unfortunately, we also lead in areas that are harmful to others around the world.

In the world of sports, heroic battles between colossal favorites and beloved underdogs occur frequently.  For example, a few weeks ago, another epic college football national championship game ended as the valiant underdog lost on the last play of the game.

This may sound strange, but I wish our country were the underdog again. Not in a military or economic sense, where we have been the prohibitive favorite since the end of World War II, but in the sense of our national identity, perhaps even our principles and core values. What would that even look like?

Can we, as a nation, set our sights on accomplishing goals so noble, so extraordinary, that the world would view us as the underdog?  Would these goals have to be centered around technology or involve some scientific breakthrough?  Or, could it be based on some transcending sense of morality or community or even spirituality? What would that look like?

I remember rooting hard for Rocco Mediate in his epic battle against Tiger Woods in the 2012 U.S. Open.  Woods dramatic victory proved to be his last major championship.  At the time, it seemed to me, everyone watching wanted the journeyman and huge underdog to break through for his first major championship. I remember thinking, how can you not root for a golfer with that name?  Rocco was jovial despite the pressure of the moment and clearly being over-matched in terms of raw talent.  Yet Rocco battled courageously to the end, and was gracious in defeat.  And that is what I would like to focus on as we begin the New Year.

Our first noble goal, as a nation for 2018, should be to be gracious in defeat.  Why?  Being gracious honors the victor but it also reveals strength of character in the vanquished.  It produces respect, spawns perseverance and the will to win next time.  The opposite emotional behavior, perhaps more typically demonstrated in our culture, is an attitude of resentment, which breeds vindictiveness.  It also taints processes and goal setting, while it prevents teamwork and compromise that is so necessary for a culture and economy to thrive long term.  In essence, an absence of graciousness knocks us off course and prevents us from accomplishing anything truly noble.

Our second noble goal is related to the first.  We need to redefine what it means to win.  Strange as it may seem, this is vitally important in the business arena. Let me explain.

In business, winning graciously means not being boastful or greedy.  It means how you win matters more than what you win.  Moreover, team victories more often produce benefits that are more impactful and last much longer than self-centered achievements.  Winning the right way produces esprit de corps, trust and commitment.  A business environment dominated by these characteristics would require less regulation and oversight, leading to less litigation and compliance costs that we all pay for directly or indirectly.  In 2018, while we strive to win, while we focus on making America great again, let’s concentrate on the how as much as the what.  Ultimately, to be great again, we must first strive to be noble again.  Being gracious, in victory or defeat, is a sure path to nobility.

From a market and economic perspective, 2018 is off to a very strong start.  Congress finally passed tax reform legislation, the global economy is accelerating, and the regulatory rollback continues to bolster the prospects for the business community in the U.S.  Reflecting these positive trends, the stock market continues to hit new highs, showing particular strength in growth-oriented sectors like Technology, Consumer Discretionary, and Health Care.  The downside to faster economic growth is that interest rates are moving higher.  In all likelihood, this trend may be in place for quite some time, as the long bull market in bonds comes to an end.  Importantly, neither economic growth, nor rising interest rates, will travel a straight path.  There will be numerous fits and starts, most of which will be unpredictable in terms of timing and magnitude.  A balanced approach to asset allocation makes the most sense in this current environment.

In business, in sports, and yes, even in politics, when you win, be gracious.  If you lose, be gracious.  Unlikely?  Probably, but anything is possible.  If our nation could come even close to building this into everyday life, we would be amazed by what we could then accomplish.  A powerful nation, unbelievably successful, yet gracious to all.  We would truly be something the world has never seen before.  Like Big Red eating his breakfast…

Or as Trainer Eddie Sweat so eloquently said in the movie “Secretariat.”

 “Hey Kentucky! Big Red done ate his breakfast this morning and you about to see something that you ain’t never even seen before. So get ready!

Gives me chills…


Michael Kayes, CFA