This article originally published in The Northern Daily Leader on 20 August 2011.
Nearly thirty years ago, as a knobbly-kneed schoolboy, winter meant more to me than just cold weather and frosty mornings, it was also the start of soccer season.
Before ‘grown-up’ sports like cricket and rugby captured my attention, life revolved around soccer, evidenced by my Liverpool doona, Liverpool pyjamas and Liverpool slippers. On the other hand, Dad was a Spurs supporter, so we always had plenty to talk about.
Like many soccer players, my greatest dread arose whenever I was asked to take a penalty kick – all that attention and pressure, and all at the tender age of 9 years old! Of course I never considered the feelings of the goalkeeper, who faced his or her own dilemma – dive left, dive right or just do nothing and stay in the middle? Unsurprisingly, these are the sort of questions that scientists love to answer, and a 2007 study by a group of Israeli researchers found that when facing a penalty kick, goalkeepers have an ‘action bias’ – which means that they tend to dive left or right more frequently than was useful. The study showed that goalkeepers went left or the right 94% of the time – meaning they stay in the middle for only 6% of the kicks they faced. However, the penalty shot went straight at the middle of the goal 29% of the time, so it turns out that goalkeepers could increase their chances of saving the penalty kick simply by doing nothing. The explanation for the goalkeeper’s actions is that they are motivated by the fear of regret rather than the fear of failure- to have dived and failed to stop the goal feels better than standing still and watching the ball go past you into the back of the net.
Recent stock market volatility presents investors with the same dilemma – should you sell out or hang in there? The action bias exhibited by the goalkeepers is just as strong in investors, where we feel the urge to do something…anything! Don’t let this happen to you – if you have an investment plan, then stick to it. A plan becomes even more important when markets get rocky, it’s definitely not the time to throw it out the window. And if you don’t have a plan (or a Liverpool doona), then do yourself a favour and get both. You won’t regret it.