When Bill Walsh transformed the beleaguered San Francisco 49ers into Super Bowl champions in just two seasons, he accomplished something no other NFL coach previously had.

The secret to his success? Organizational excellence, strategic brilliance, and advanced leadership. But that wasn’t all.

Walsh also adhered to a carefully curated set of principles which bear a striking resemblance to those we believe pave the way to long-term investment success.

Adapted from his bestselling book, The Score Takes Care of Itself, here are four lessons investors can glean from the wisdom of Bill Walsh.

Lesson #1: Develop a blueprint for success

When Walsh became head coach of the 49ers, his agenda did not include a timetable for winning.

Instead, he introduced a set of “philosophical tenets” that would give anyone in the organization a practical approach to decision-making.

Walsh’s system for deciding what should be done, when it should be done, and why it should be done became the organization’s North Star.

Walsh’s North Star parallels each of our clients’ personal Investment Policy Statements (IPS).

A written document that outlines financial goals and time horizon, an IPS also helps define tolerance and capacity for risk, along with the expectations and guidelines for portfolio management. An IPS is the foundation on which investment success is built.

Articulating this long-term investment policy in writing ensures important investment decisions are based on logic and reason rather than an emotional response to extreme optimism or pessimism in the market.

Lesson #2: Control what you can control

Walsh believed about 20 percent of a final football score was due to luck—a referee’s bad call, a tricky bounce of the ball, an injury, or some other happenstance.

He accepted he couldn’t control these random events.

Walsh firmly believed, however, that he could control the remaining 80 percent of the game with comprehensive planning and preparation. This is also true of markets and investing.

While investors  can’t control how the market will perform tomorrow, next month, or next year,  they  can control how they participate in markets by diversifying and controlling costs.

Research shows just 4% of stocks have delivered returns in excess of T-bills. Rather than incur the risk and costs of searching for the needle in the haystack, diversified investors intentionally embrace the haystack. They then work to drive down costs and taxes to ensure the lion’s share of the market’s return ends up in their pockets.

Lesson #3: Don’t be blinded by “flash”

In the NFL, raw speed was once widely viewed by coaches and scouts as the litmus test of a receiver’s potential—and desirability as a draft pick.

While Walsh valued a player’s raw speed as measured on the track, he also prized “functional” speed—how fast a player can move on the field, in full stride, with a ball in his hands.

This unconventional approach enabled Walsh to see the potential in a young Jerry Rice, who went on to become the greatest receiver in NFL history.

In investing, it is possible that by chasing flashy stocks or shiny asset classes you’ll get lucky and earn a supersized return. But it isn’t probable.

Whether it is piling into tech stocks in 1999, going to cash in March 2009 (or 2020), or chasing meme stocks such as GameStop and AMC Entertainment in 2021, investors have a long history of buying before the crash or selling before the boom.

When it comes to investing, following the crowd—buying what’s popular and selling what’s not–is a sure recipe for the poorhouse. Standout investors, like football coach Bill Walsh, have the confidence to go against the herd and focus on what matters most, not what is just popular.

Lesson #4: Stick to the plan

Bill Walsh was fond of saying, “Flying by the seat of your pants precedes crashing by the seat of your pants.”

This is why, before a single dollar is ever invested, Vista develops a personalized investment plan for each client.

This plan incorporates their personal circumstances, and is guided by several simple, yet critical, principles many investors overlook:

  • Spread your wealth across a global mix of stocks, bonds, real estate, and cash.
  • Diversify broadly within each asset class.
  • Use low-fee, low-turnover funds to keep a lid on costs and taxes.
  • Rebalance to control risk and “buy low, sell high.”

Sticking to these principles might not win you a Super Bowl trophy, like they did for Bill Walsh, but they’ll give you something immeasurably more important: your best chance at long-term investment success.

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Adapted in part from The Score Takes Care of Itself: My Philosophy of Leadership by Bill Walsh, Craig Walsh, and Steve Jamison. Tantor and Blackstone Publishing, 2009.