I’m constantly intrigued by the parallels between investing and sports. They’re illuminating as well as fun, and thus they’ve prompted two past memos: “How the Game Should Be Played” (May 1995) and “What’s Your Game Plan?” (September 2003). In the latter memo, I listed five ways in which investing is like sports:
· It’s competitive – some succeed and some fail, and the distinction is clear.· It’s quantitative – you can see the results in black and white.· It’s a meritocracy – in the long term, the better returns go to the superior investors.· It’s team-oriented – an effective group can accomplish more than one person.· It’s satisfying and enjoyable – but much more so when you win.
Another angle on the investing/sports analogy has since occurred to me: an investment career can feel like a basketball or football game with an unlimited number of quarters. We may be nearing December 31 with a substantial year-to-date return or a big lead over our benchmarks or competitors, but when January 1 rolls around, we have to tackle another year. Our record isn’t finalized until we leave the playing field for good. Or as Yogi Berra put it, “It ain’t over till it’s over.” It was Yogi’s passing in late September that inspired this memo.