WHAT THE JAPANESE CAN TEACH US ABOUT INVESTING
Okay, I’ll admit – the title of this piece is a bit misleading, but I figured that with all the negative comparisons to Japan I keep writing here on the site I might as well write something positive.
I am a baseball aficionado. Not just a casual observer. Baseball has always fascinated me for reasons that bore the casual observer. I love the 7th inning hold, the stealing of signs, the sac bunt, etc. Those things get me excited when I watch baseball. See, baseball is a game of little things that all come together to form one larger result. Big plays rarely win baseball games.
No one in the game of baseball does the little things better than Ichiro Suzuki. I could watch Ichiro play baseball forever. To the casual observer Ichiro is not particularly exciting. He is no Vlad Guerrero – who swings the bat like he is chopping a tree down with one swing. He is no Albert Pujols – who has the purest swing in the game. But an at-bat with Ichiro is like a delicate ballet combined with the methodology of a chess match. Just watch this video of Ichiro batting against American power pitcher Curt Schilling:
The casual observer might only notice that Ichiro gets out. But this is the brilliance of Ichiro. This sacrifice fly is a typical Ichiro at-bat. The game is tied 0-0. With the bases loaded and no outs Ichiro isn’t trying to hit a home run. He isn’t even trying necessarily to get a hit. Ichiro gets himself in a 1-2 hole and plays into the weakness of a big strong American power pitcher. Schilling is thinking high heat. Ichiro eats it up and sends the ball into deep left field. The at-bat results in an out, but more importantly, it results in a run scored. 1-0 Japanese All-Stars over Americans.
Investing is no different. It is a game of repetition where hundreds of small actions result in one larger result. But most importantly, it is a game of risk management. It is not the home run hitter who wins in the long-run. Rather, it is that strategist who devises the best long-term plan who ultimately wins. While hitting home runs is sexy it is rarely a recipe for success in the investment world. Aim high, but play small. Over time, good risk management and patience wins. Power is no substitute for precision and patience. The same is true in the world of investing.
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This is a great post, and I’m not even a baseball fan.
Maybe we are on the same wavelength and this is where the genesis of this post came from, but I’ve never been more frustrated with the market from an intellectual standpoint of what I think it “should” be doing relative to what it is. Maybe that’s an over-statement, as I was quite frustrated through much of April.
Either way, I feel you. The temptation right here, thinking you know something, is to go big. The patience required to ride this thing out right here is significant.
I feel like I know how it is going to resolve itself, but the market seems to be asking us all to make a big bet one way or the other right here only to get our faces ripped off.
Maybe you’re feeling the same way.
Thanks for this, TPC. I have been observing Ichiro since he came to the States 10 years ago. Since then he’s been hitting at least 200 hits year in and year out.
What amazes me about Ichiro is not just his batting but what he says. He has a deep philosophical view for hitting, which I have also applied for my investing.
Once a Japanese reporter asked him what his next goal was after he hit his 200th hit . Ichiro said “to hit the 201th hit”. The best words what Ichiro said was this,
“The succession of achieving small goals is the only way to realize a big goal.”
Whether in baseball, investing, work, raising a family, or life in general … this is a great message.
Yagottaluvit.
Great thread, TPC.
I’m loving these sports analogies…
Don’t try and be an Ichiro if your not an Ichiro though.
Everyone must play or trade or live according to his/her internal barometer. It would be a waste of human capital to do otherwise. Along that vein of thought, Ichiro maximizes his personal abilities ( and represents Japanes culture fittingly) by being a grinder. Technically flawless and a thing of beauty.
But it would be a waste for a natural swinger like Pujols or Grifffey to waste their talent by dialing it back. And it would conflict them. They are in the don’t think, just swing, camp.
Not better or worse, just different.
Peyton Manning the strategic attacker or Brett Farve the gambler? Both play to their minds abilities and find success. Neither could play the others’ brand of ball.
Gary Kasparov(creative and dynamic) or IBM’s deep blue? ok IBM got him but 2 wins to 1 loss with 3 draws…
People who trade/invest a style different from their internal wiring will always be in conflict. Same with sports, life, women, or food. Once you are who you are, stuff gets easier.
I’ll be honest, I don’t have the patience for long term investing. I trade noise and feel. So to me fundamentals take a back seat. Occasionally I see a spot to go longterm(BP?), but inevitably I sit their and watch it do nothing for a week and it haunts me. So I get out of it and start banging out E-mini’s. Other people cant stand the stress and senselessness of swing trading nuttiness, so they derive edge other places.
I guess I’m just saying “Play to your strengths.”
Good comments. I would only add that patience can apply to the short-term as well. Ichiro has minutes if not seconds between pitches so patience is all relative. I wait months to place conviction trades at times. Patience doesn’t have to only be applicable to the old Buffett myth of buy and hold….
Ichiro? I might have to go Earl Weaver on you! Three-run homerun!
TPC,
I agree with you in principal, but Americans are participating in a stock market and economy that should be compared to the slot machines in Las Vegas. For, you see, a slot machine is rigged to produce a profit for the casino operator. Everyone knows this, but guess what; they still line up in the tens of thousands in an attempt to beat the odds.
Wall Street and the banking industry are no different. This is more obvious today than ever before. In baseball and all other sports there are participants and there is always a winner and a looser. Our once great nation has now decided to pursue an economic policy wherein the losers are rewarded and not only are they allowed to stay in business, but they are walking away with trillions of dollars in their pockets.
Congress, our President, nor our Fed can step in and extend the game once the Texas Rangers defeat their opponent, thus giving the real looser a chance to win. Why have they decided to do so now, when it is as obvious as ever that many of our once great nation’s bankers, citizens, business investors and government officials lost the real game, but in the end have become the winners? What has happened to the real WINNERS of this GREAT NATION should be considered criminal.
That was fun to watch! Hardly anything has changed about his approach in 11 yrs.
Good advice, thanks for your writing and your insight.