For drivers in most of the world who keep to the right side of the road, making a left turn is often a real challenge.
Here are some notable statistics:
- Left turns account for 40% of vehicle crashes, generally because drivers fail to yield.
- About 20–25% of intersection crashes result from left turns.
- Nearly 60% of left turn accidents involve cars traveling straight or crossing traffic.
- In cities, left turn collisions make up around 30% of intersection incidents.
- According to this data, New York City transportation planners determined that left turns are three times as likely as right turns to cause a fatal crash.
- Over half of left turn crashes stem from not yielding.
- Approximately 12% of all traffic fatalities involve left turns.
- About 75% of these crashes happen at intersections with traffic signals.
- Left-turn accidents rise during rush hours, especially from 4 pm to 6 pm.
- The median age for drivers involved in these accidents is 45.
- Motorcycles are involved in about 40% of left turn crashes, versus just 15% for vehicles on average.
- Bad weather—rain or wet roads—raises the chance of left turn accidents by 2.5 times.
- Urban environments see nearly 70% of all left turn-related incidents due to dense traffic.
- Roughly 65% of drivers responsible for these crashes are male.
- Average repairs after such an accident exceed $4,000 per vehicle.
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In response to these risks, United Parcel Service (UPS) began in the 1970s to use “loop dispatch” routes that emphasize right-hand turns. This approach evolved further with the introduction of ‘Orion’ in 2008, an advanced routing program that specifically reduces left turns. Orion processes 250 million addresses daily and makes 30,000 route optimizations every minute. As explained in Fortune by Bob Stoffel, UPS Senior Vice President, “We’ll never have a person turn left to deliver on that side. We’ll have someone go down the right-hand side and someone coming back down the right-hand side to avoid those left-hand turns,"
Why UPS trucks never turn left
“A lot of individual drivers felt the new routing software was making their trips longer, but they were later proven wrong. This is the thing about traffic; it’s such a complex system that often the individual cannot get a sense of the overall efficiency of the system and optimize accordingly. It’s also one of the counterintuitive, ‘slower-is-faster‘ affects you often see in traffic.” – Jack Levis UPS Senior Director of Process Management
Maximizing the odds of surviving an automobile crash and a market crash are planned for very similarly.
Financial planning is like a road map. The planning helps you see where you are going and avoid getting yourself into bad situations, much like the Orion software does for UPS. The idea behind both financial planning and UPS routes is to manage risk. We can’t avoid it, but we can minimize the exposure. This over time will get us to our destination more times than not.
In investing the biggest thing, we try to avoid is a complete loss of capital. Once it is lost there really is not chance on getting it back. Even smaller amounts can be a struggle. As the chart below shows, even a 50% loss requires a 100% rate of return just to get back to even.
This is why proper asset allocation is so important to your financial plan. The plan will suggest ways to minimize the risk taken for a given rate of return combining stock, bonds and cash to create a portfolio which will survive market drawdowns.
Reiterating from above, Orion, the software that analyzes 250 million address points per day and performs 30.000 route optimizations/minute. This is very similar to the Monte Carlo Simulation that is normally performed to see if your retirement money will last for you. Wikipedia states that these simulations are “computational algorithms that rely on repeated random sampling to obtain numerical results. The underlying concept is to use randomness to solve problems that might be deterministic in principle.” The introduction of Monte Carlo Simulation into retirement planning has been an eye-opener planners and clients. It helps give guidance into how their investments may playout into the future by looking at the past.
For example, we can look at the 60% stock and 40% bonds portfolio and understand how it may perform by looking at what it did during past significant market corrections. We know at the outset that it will underperform a 100% stock portfolio, but that isn’t the point. The point isn’t how much the 60/40 grew—it’s how much it didn’t lose during downturns and if those loses are manageable.
Consider history:
- The Great Depression: The 79% stock market crash known as the Great Depression is the worst drop, but if you held a 60/40 portfolio, you only experienced a 52.6% decline.
- Inflation, Vietnam, and Watergate: The 60/40 portfolio’s 39.4% decline in the early 1970s was the third-worst drop for the 60/40 but still substantially less than the stock market’s decline of 51.9%.
- The Lost Decade: The stock market declined 54% over the course of the 2000s (a time that included both the dotcom bust and the Great Recession), and it didn’t climb out of this hole until May 2013. The 60/40 portfolio, on the other hand, declined 24.7% in the early 2000s—less than half as much as the stock market did. And it briefly got out from underwater in 2007 before it started heading back down a second time in October 2007.
The roll of asset allocation is to help us stay on the road and reach our destination without enduring an accident that we can’t recover from. In conjunction, the financial plan is there to help us provide direction and risk management to keep us out of harm’s way as much as possible.
