Synopsis: Two Civil War battlefields demonstrate what can happen when you believe you are on a hot streak and change tactics accordingly.
The teenage Private, a veteran of just a week’s worth of service in the Army of the Potomac, felt the heat of the July sun. Sweat ran in rivulets down his dirt streaked face and his ears rang. Grease was thick on his hands and gunpowder floated on the breeze to coat his nostrils. He was miserable.
“Why aren’t we firing back?” He whined. He continued to hunker down, because that was what he had been told to do.
“Quiet boy!” barked his Sergeant.
“At least they are lousy shots, right Sarge?” The artillery barrage from across the valley was, for the most part, missing high. The Sergeant didn’t answer, tired already of the new recruit and his nervous banter.
And then the guns went silent, an eerie quiet stretching across a seven-mile front.
“Is that it? Is the battle over? Is Bobby Lee on the run now?”
“Get the cannister ready boy.” The Sergeant looked as grim as ever, but there was a certain satisfaction in his voice.
“Cannister? For what?”
“For them.” He pointed downhill at men emerging from the tree line and beginning to form ranks.
“Here they come!” the Sergeant bellowed.
And then suddenly, the line infantry to their left and right erupted in chants of “Fredericksburg! Fredericksburg!”
“Sarge, Fredericksburg was seven months ago. Have those boys lost their wits? Don’t they know we are at Gettysburg now?”
His Sergeant gave a long sigh. “Ignorant farm boy! They aren’t confused. This is our revenge for what happened at Fredericksburg! Only this time the boot is going to be on the other foot.”
The boy looked at his boots, seemed to suddenly understand. “You mean they are going to cross that field and attack us uphill? When we have been dug in here for days? Why would someone do such a thing?”
The Sergeant furrowed his brow, and finally said softly, “You know youngster, that is a good question.”
And it remains a good question one hundred and fifty-five years after the Battle of Gettysburg. Robert E. Lee won a decisive victory at Fredericksburg in 1862. Entrenched on high ground, he dealt an embarrassing defeat to Federal forces who continued to charge Mayre’s Heights bravely, but in in ultimate futility. Indeed, they never seriously threatened the Confederate position and granted Lee an easy victory.
Over the next few months, Lee’s army continued to win, so that he came to believe they could accomplish anything. Robert E. Lee then fell victim to what is known as the Hot Hand Fallacy. He believed the odds had somehow changed because he, and his army, were on a roll. Thus, he ordered his boys to do what the Federals had failed to do that winter and carry the high ground.
Confederates launched the most infamous advance in military history, a three quarter of a mile march under enemy fire to attack entrenched positions on the aptly named Cemetery Ridge near Gettysburg. Today we know it as Pickett’s Charge. Lee, Pickett and the soldiers of the Confederacy found out the hard way that just because you’ve strung together a few victories in a row, that does not change the odds of ensuing actions and their outcomes. Charging uphill still had a low chance of success, no matter who was attacking, who was defending and who had the hot hand. The Confederate Army would receive a mauling it couldn’t afford, and never again threaten a Northern city.
For investors, a string of good or bad results doesn’t change the risks you face or your long-term odds of success. Yet investment dollars often ebb and flow based on recent performance, despite repeated warnings that past performance is no predictor of the future. For instance, a bullish run in the stock market leads many to allocate more to stocks. Why would someone do such a thing? Your goals and the risks you take haven’t changed, so your tactics shouldn’t either. Otherwise you risk losing more when your hot hand turns cold and having to fight an uphill battle to recover.
Photo: Author’s Collection
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