Pulling the Goalie [Post 26]

In the National Hockey League (NHL), coaches will commonly pull their goalie out in the final minutes of a losing contest to add any offensive attacker to the ice, increasing their chances to score but also leaving their own net wide open.

The NHL determines the playoff bracket based on wins, not points allowed, theoretically making it irrelevant whether a team loses by 1 goal or 4 goals. However, it matters for somewhat arbitrary reasons. Fans prefer close games, and coaches enjoy not losing their job over blowout losses.

Quantitative analysis by Clifford Asness and Aaron Brown1 suggests that a team losing by 1 goal should pull their goalie around the 6-minute mark, and a team losing by 2 goals should pull the goalie around the 13-minute mark. Though this is rarely the case in reality, as the goalie is usually pulled with only a couple minutes left in the match.

This late goalie-pulling tradition seems to have less to do with probability and more to do with adhering to the way things have always been done. An example from the 1980 "Miracle on Ice" Olympic game illustrates this. The heavily favored Soviet Union faced a US team of college players and found themselves down 3-4 with ten minutes remaining. The Soviet’s coach did not believe in pulling the goalie, and they found themselves on the losing end of a 3-4 contest with the goalie still in the net.1

I've observed a common tendency among people to have a risk-averse mindset, often associating all risks as negative. However, it's important to recognize that not all risks are inherently bad, as some may present worthwhile opportunities for favorable outcomes. I'm not suggesting engaging in life-threatening stunts, taking on unmanageable loans, or gambling away the farm. Instead, I'm referring to sensible risks where the potential benefits outweigh the possible downsides, making them worth pursuing.

Consider the benefits of pursuing a dream career in your 20s instead of sticking with a safe but less exciting job, investing broadly in the stock market over long periods of time instead of sitting on cash, and pulling the goalie if it means an increased likelihood of victory.

Even the downsides in these given scenarios seem worth it. If the dream career doesn't work out, there are other career paths to explore. The worst 20-year US stock market return from 1926-2023 was still a 2% gain, which is still better than burying cash in the backyard.2 And when it comes to losing by 1 goal vs. 2 goals, one might question whether there's any substantial difference at all.

Sometimes great opportunities are hidden, disguised as risk. Embracing calculated risks can often be the secret to discovering growth, fulfillment, and success.

1:

Asness, Cliff S. and Brown, Aaron, Pulling the Goalie: Hockey and Investment Implications (March 1, 2018). https://ssrn.com/abstract=3132563 or http://dx.doi.org/10.2139/ssrn.3132563

2:

Carlson, B. (2023, February 15). Deconstructing 10, 20, & 30-Year Stock Market Returns. A Wealth of Common Sense. https://awealthofcommonsense.com/2023/02/deconstructing-10-20-30-year-stock-market-returns/#:~:text=The%20worst%2020%20year%20return,Depression%20and%20World%20War%20II.

Image:

https://en.wikipedia.org/wiki/Empty_net_goal#/media/File:Empty_net_goal_(3376907373).jpg