baseball

A Certain Set of Skills
photo shows a baseball sitting on a striped jersey

When designing a portfolio, one might think about it like a baseball team. Obviously we want to build a winning team, but we know it won’t likely be an undefeated team. The strength of the team is in the versatility of the lineup.

Each player brings a skillset. There’s the base-stealer, the defensive replacement, the slugger, the all-star… We’re thinking about how some of these spots play a role in portfolios.

  • The Veteran Player. This is an older company that pays a nice dividend. It provides value even if it doesn’t perform as well as the others.
  • The Utility Player. This is a durable company providing steady, unexciting performances.
  • The Streaky Player. This is a company that has stretches of greatness followed by mediocrity—but it’s bound to turn it around. The potential is there, and the broader patterns suggest patience.
  • The Slugger. This company can carry a portfolio some days, strike out other days. It’s getting after it.
  • The All-Star. This company is the face of the portfolio: everyone knows it for its all-around performance. It’s a big presence.

No portfolio can be made from just one type of player. A portfolio consisting of only all-stars would be too expensive (and we like a bargain). A team of streaky players would be good during the good times—and tough to watch when they’re all struggling in sync.

A balanced lineup is what we desire. No guarantees on any particular outcome, but we think there are plenty of strengths that come in handy. Clients, when you have questions, please write or call.

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Play the audio version of this post below:

A Certain Set of Skills – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

A Certain Set of Skills
photo shows a baseball sitting on a striped jersey

When designing a portfolio, one might think about it like a baseball team. Obviously we want to build a winning team, but we know it won’t likely be an undefeated team. The strength of the team is in the versatility of the lineup.

Each player brings a skillset. There’s the base-stealer, the defensive replacement, the slugger, the all-star… We’re thinking about how some of these spots play a role in portfolios.

  • The Veteran Player. This is an older company that pays a nice dividend. It provides value even if it doesn’t perform as well as the others.
  • The Utility Player. This is a durable company providing steady, unexciting performances.
  • The Streaky Player. This is a company that has stretches of greatness followed by mediocrity—but it’s bound to turn it around. The potential is there, and the broader patterns suggest patience.
  • The Slugger. This company can carry a portfolio some days, strike out other days. It’s getting after it.
  • The All-Star. This company is the face of the portfolio: everyone knows it for its all-around performance. It’s a big presence.

No portfolio can be made from just one type of player. A portfolio consisting of only all-stars would be too expensive (and we like a bargain). A team of streaky players would be good during the good times—and tough to watch when they’re all struggling in sync.

A balanced lineup is what we desire. No guarantees on any particular outcome, but we think there are plenty of strengths that come in handy. Clients, when you have questions, please write or call.

Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

A Certain Set of Skills – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

It’s a Whole New Ball Game

picture shows sunrise behind dewy grass

Millions of us are living through new experiences. The global pandemic has affected many aspects of daily life. Sportscasters and others have used the expression “It’s a whole new ball game” to describe suddenly changed circumstances.

It seems apt now. The rate of change—and the stakes—in this pandemic can feel overwhelming and disorienting. And yet we wonder…

We humans start out knowing nothing about anything, right? Babyhood was a whole new ball game, along with getting teeth, walking, going to kindergarten, making friends (and enemies), and all the other developments in our lives.

So how is it that we have each managed to adapt and deal with this lifetime of ever-changing circumstances, coped with each and every “whole new ball game”? What lessons are there as we each deal with our current set of changes?

Some of the answers might be found in our own pasts, the things that have taught us perspective. Maybe the answers are in our goals and priorities: they could guide the way through. No matter what we each face now, the overall challenge of change remains.

We might revise the old saying and conclude, “It’s always a whole new ball game.”

Clients, if you’d like to discuss this or anything else, write or call.

No Fair-weather Fans

photo shows a young man with a baseball bat and

With the tenuous return of baseball this year, we’re thinking about what fandom means for the investing world.

One thing that strikes us is the redundancy of a phrase like “long-term investing.” Investing is already aimed at the long haul, right? You’ve heard it from us before: “Own the orchard for the fruit crop.” We have been explicit that our investment strategies are based on long time horizons.

But we dove a little deeper and came out with an even richer appreciation for this approach.

Turns out the most common notion of “investing”—using what we have to generate income or profit—is a fairly modern one. The phrase popped up in the 17th century and gained traction by the 19th, per the Oxford English Dictionary.

But a few hundred years before that? It was more literal. “Investing” was closer to its Latin root vestire: to dress or clothe, often in symbolic garments.

Even today, when the crowds aren’t allowed in their favorite stadiums, the word “investing” still has us imagining a sea of sports fans, adorned in those special garments of their favorite team. A sea of investors.

They dress in their team’s colors, and win or lose, by golly they’ll put them on next weekend too.

They’re fans for the long haul; they’re invested.

Like a fervent fan, the phrase “long-term investing” is cheering pretty loudly for a proposition we’re already on board with. It doesn’t mean we can’t be disappointed in our investments, nor does it mean the lineup will never change.

But when we buy in, when we wear the clothes of, this is no fair-weather enterprise; we’re here for the long term. Clients, if you’d like to discuss this or anything else, please write or call.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

More Lessons from Moneyball

© Can Stock Photo / findog822

Michael Lewis’s book Moneyball turned 16 over the summer. In 2015, we wrote about the contrarian lessons we noticed in the Moneyball movement. The Oakland A’s won by using data to make roster decisions, favoring things like on-base percentage over batting average. Then, after the rest of the league adopted the A’s process, the 2015 World Series champion Royals won by bucking the trend and not following along.

We’ve found another lesson within Moneyball that applies to us—and you. Oakland A’s general manager Billy Beane rarely watched the product he helped put on the field to see how it performed. This may seem unusual (who wouldn’t want to watch baseball as part of their job?), but Beane had his reasons.

In a 2014 interview for the Men in Blazers podcast, Beane explained that he didn’t watch games because he did not want to do something about it in the heat of the moment. “When I watch a game, I get a visceral reaction to something that happens—which is probably not a good idea when you’re the boss, when you can actually pick up the phone and do something.”

Beane continued by saying doing something “probably isn’t logical and rational based on some temporary experience you just felt in a game.” This has meaning to us.

We all know that the market goes up and down, and we don’t find watching the ticker each second of the day to be helpful. Like Beane, we’ve strategically built our portfolios for performance over the long term (no guarantees), and we’re willing to ignore a hiccup from a star on occasion.

Like Beane, we can remove ourselves and our initial emotions from the equation. Then we can focus on only the moves to better our “team” and its goals in the big picture.

Clients, if you’d like to talk about this, or anything else, please email us or call.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Hit ’em Where They Ain’t

© Can Stock Photo / dehooks

Investors can learn a lot from Willie Keeler, one of the smallest major league baseball players in history. Wee Willie stood 5’4” and weighed 140 pounds.

Playing from 1892 to 1910, Willie was a prolific hitter, with a batting average of .345 over that long career. He explained his success with words that have become part of baseball lore:

“Keep your eye on the ball, and hit ‘em where they ain’t.”

We believe it makes sense to strive to understand investment opportunities, researching companies, trends, and economic developments to try to gain an edge. This is what it means to “keep your eye on the ball.”

As contrarians, we seek to avoid stampedes. If the crowd is there, we probably want to be somewhere else. As Warren Buffett once said, “be greedy when others are fearful, and fearful when others are greedy.” Isn’t this the investment version of “hit ‘em where they ain’t?”

It would be interesting to know whether Wee Willie Keeler did any investing. Did his investing philosophy match his baseball hitting philosophy?

We cannot know the answer to that. But we do know, our investing philosophy matches up very well. “Keep your eye on the ball, and hit ‘em where they ain’t.”
Clients, if you would like to talk about his or anything else, please email us or call.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Take Me Out to the Ball Game

© Can Stock Photo Inc. / dehooks

Thirteen years ago, Oakland manager Billy Beane turned the world of professional baseball on its head. As depicted in the movie Moneyball, Beane knew that the Oakland Athletics didn’t have the budget to compete head to head with better-funded teams from larger markets. He looked to advanced statistics to give him an advantage, realizing that baseball’s conventional wisdom did a poor job of judging player performance. Traditional baseball skills like speed and contact hitting were being overvalued, while game-winning skills like patience at the plate and slugging power were being undervalued. By focusing on what really mattered over what was popular, Beane was able to find the best bargains in the baseball universe.

While many baseball franchises grudgingly followed suit after Beane, traditionalist manager Ned Yost has stuck to the old wisdom. Under him the Kansas City Royals have broken every rule set forth in Moneyball, emphasizing speedy contact hitters who will swing at anything to get the ball in play and steal bases at the slightest opportunity. Despite that, he’s taken the Royals to two consecutive championships and a long-awaited World Series pennant, leading some fans to hail his success as the death of Moneyball-style statistics.

In fact, Ned Yost apparently took to heart the one true lesson behind Moneyball: never follow the crowd.

The Oakland Athletics were able to win because they turned aside from what “everybody knew” about baseball. After their successes were highlighted by Moneyball, what “everybody knew” changed. When everybody else started chasing after the same statistics that led the Oakland A’s to victory, they started undervaluing old-fashioned baseball skills like speed and contact. Ned Yost ignored what “everybody knew” about those old baseball skills and built a great team around them.

Billy Beane is fond of comparing the baseball world to investment markets, and the comparison is an apt one. Both baseball and investment markets are prone to cycles as people chase after the crowd—creating opportunities for those who avoid the common wisdom of what “everybody knows.” The Royals’ pennant is a testament to the value of going against the grain.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.