I sucked at baseball when I was younger. It wasn’t because I was physically incapable of playing baseball.¹ It was mainly because I was undisciplined and tried to do too much. For instance, I was a decent right handed hitter, but I spent half my time practicing left handed. I had this infatuation with being a switch hitter because I grew up watching Bernie Williams and was obsessed with Mickey Mantle. And after having played hockey left handed for much of my youth I was comfortable swinging a bat left handed. This was super dumb. Baseball is hard enough as it is. Most great batters get out 70% of the time and here I was trying to get good at both sides of the plate wasting half my time on a skill I didn’t need. Quite simply, I lacked the discipline to focus on one thing and do it well.
I later retired from baseball and joined one of those old guy beer drinking softball leagues. This was even harder than baseball.² I joined a team loaded with young guys playing in an older guy’s league. We were superstars on paper. I learned to stay on one side of the plate, but the underhand pitch moved so slowly that I couldn’t get disciplined hitting it. It took weeks just to let the ball come to me so I could slap it at the right time it crossed the plate. Long story short, the old guys kicked the crap out of us and to add insult to injury we probably lost the beer drinking competition along the way. Our problems weren’t athleticism. It was all discipline. Let the ball come to you….
My fielding was even worse. I generally played infield and my discpline here was equally disastrous. My impatience resulted in lifting my head/glove or converging on the ball too quickly. I couldn’t ever get used to the ball just coming to me and staying patient and down on it. Again, a lack of discipline was the cause of so many problems. Let the ball come to you….
You can probably see all the asset allocation metaphors in there:
- Most people try to do more than they need to. They want the optimal portfolio rather than the appropriate portfolio. They think sophisticated beats simple when the exact opposite is usually true.
- Most people aren’t disciplined. They chase the markets rather than letting the markets come to them. Short-termism leads to undsciplined behavioral biases.
Before you can become good at something you have to first recognize why you’re not good at it now. Luckily for me I made most of my investment mistakes on the baseball field long before I ever had a dime at risk in the financial markets. Understanding those mistakes and creating a process for minimizing those mistakes has been a crucial element of better investment performance.
¹ – What I mean by this is that I can run and throw. Not fast or well necessarily. But I am physically capable of both.
² – Funny story, my high school baseball team once played a women’s softball team for charity. I had never seen an underhand fastball and boy was that something to behold. I walked three times that game and thanked my lucky stars that she couldn’t throw that 80 mph pitch across the plate 3 times because I would have been toast.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.