Public Domain. Source: Wikimedia
Yesterday was baseball’s Opening Day across the country. For the first time in 50 years, all the major league teams were scheduled to start their season on the same day. While it seems a little early in New England – there’s still snow on the ground, and Mount Washington is issuing avalanche advisories – the weather is warming up elsewhere, and the arms and bats are warming up, too. And while my favorite teams had mixed results, there are lessons from the ballfield that can resonate with investors.
The most famous analogy comes from Red Sox slugger Ted Williams. He penned a book, The Science of Hitting, where he outlines how he learned to become the last .400 hitter in baseball. Williams divides the strike zone into 77 mini-zones, each the size of a baseball. He assigns an expected batting average to every zone. A fastball down the middle of the plate gets a .450; a curveball low-and-away receives a .230.
Ted Williams, 1949. Public Domain. Source: Wikimedia
Williams didn’t think he could hit every pitch. He waited for one that he thought would be in his sweet spot. And when the fans screamed and called him a bum for just standing and waiting, he ignored them. The first rule of hitting, Williams wrote, is to get a good ball to hit.
Investing is similar. Investors need to know their sweet spot, their area of particular expertise. It might be value investing, it might be turnaround situations, it might be quantitative analysis. Investors need to understand their zone of competence, their sweet spot, and wait for a fat pitch. Unlike baseball, there’s no umpire calling balls and strikes. You don’t get called out for looking. Successful investors wait for the right idea that fits them.
Patience is essential for ballplayers, and it’s critical for investors. If you get out to the ballpark this year, watch and see who’s patient. They just might have a breakout season ahead of them.
Douglas R. Tengdin, CFA