There really can be no debate or argument about who has been far and away the most successful pure investor in the past 100 years or may be forever. There have been few fortunes as large as the one amassed by that amazing character.
He is probably is the only one who never ran an operating business, except for brief moments to resolve a problem investment.
And, to this very day he still runs his whole portfolio of companies and investments from a single office with a total of 23 other people. His portfolio includes over 200 different significant companies and investments and is worth way over $50 billion.
Warren Buffett is now 82 and still is brilliant, eccentric, home-spun, down home, funny, exceedingly articulate, old fashioned and avant guard at the same time and has a world wide circle of friends.
He has been spinning wisdom in his annual letters to shareholders for 50 years and his exploits have been well documented in several very amusing and readable books.
Perhaps his most interesting, yet inscrutable, metaphor about investing well was: "Investing is like baseball only there is no umpire calling balls and strikes. You get to wait for the pitch you like."
He has never, to my knowledge, amplified beyond that comment. He does not explain what happens when you swing and miss three times. Do you get another turn at bat or do you become a lawyer -- a profession he deplores? What happens when you get a hit and get to second base -- are you there just stuck there because you are the only batter? Etc.
Given his history, which parallels the Bronx Bomber, Babe Ruth, it recently struck me there might be some value in probing deeper into his thinking in using the metaphor which, knowing him a bit may be like an iceberg where the invisible part is the bulk the wisdom.
Baseball has captured the imagination of jocks and intellectuals alike for a very long time because though it uses only two instruments -- a ball and a wooden stick -- there are endless permutations and combinations that the 18 players [two teams] engage in to tantalize and tease the imaginations of millions of fans [investors]!
So let's start with the pitches [read sales pitch in Warren's world]. They come with curves, spin, spit, change up, drops, thumb tacks, vaseline and sometimes aimed at the batters head. Boy that fits the metaphor like a first baseman's glove!
Next is the bat. It is made with straight grained hardwood and shaped to be elegantly balanced. Perhaps the bat's equivalent in the metaphor is the brain of the investor -- hard headed and elegantly balanced. But a lot of bats splinter into many pieces. Wow, that happens too with many investors brains!
Then there is the ball. It travels fast -- sometimes more than 100mph -- it looks large and small depending on where the viewer is and it can be truly deceptive before it meets the bat and afterwards. This is the equivalent of "the opportunity" to invest. The viewer tries to process a small amount of information very fast to either connect with the ball or catch it after it is hit. This is where patience pays in waiting for the right pitch -- investment.
Does the batsman prefer to be a slugger or someone who goes for singles or doubles? Babe Ruth hit a lot of home runs but he struck out a lot too. Warren has hit a few dozen home runs, quite a few triples and doubles and struck out very rarely. He says the trick is NOT to lose money because that doubles the challenge of consistently making money grow.
Warren talks a lot about his team of great mangers. In baseball parlance those folks are the people who field, catch and throw the ball. As good a batter as Warren is he could not have won as many "games" as he has without spectacular teammates; that ought to be pretty clear.
The baseball diamond is an interesting question. The ball field is not a level playing field. The pitcher has a mound about three feet higher than home plate which means he towers over the batter the way investment pitchers have the advantage by controlling the information and facts. That point resonates with investors all the time.
Warren has never been 'into' forced plays, bunts, balks and in his game there is no such thing as an intentional walk. The metaphor works well in this regard because every manager/player, who uses those tricks, has broad discretion to use them or not.
Rather than beat this horse with a broken bat any longer, I hope you can conclude safely that his analogy to baseball holds plenty of warm and reassuring sweat and justifies more folks reviewing their investment experience in baseball terms.
They thus might break out of a slump, if they can figure out how to follow the baseball model of the 'Omaha Bomber'!
PS: Please do not tell Warren I gave away, for free, his secret sauce. He likes to maintain his monopoly on wisdom and I do not blame him!