The Third Dimension of Investing

The other day my partners suggested that I write about the “fun” of investing. It was right after a 12-hour, 100-point “down day” in the market. Since I tend to take my job seriously, it was hard for me to embrace the idea of “investing and fun!” But, after a good night’s sleep, I began to see it more clearly.

My client and friend Jim G. is really into baseball. As a matter of fact, Jim is the only one I know who can name (off the top of his head, no less) the seven (count them, 7) ways a player can get to first base without a hit.

Jim spends a lot of time watching and going to games, reading the scores, discussing salaries, and prognosticating on the outcome of the season. Baseball is a joy for Jim. What my partners were telling me was that Jim and I are alike. Only our passions are different.

Without going into complicated analogies, it does seem that Jim’s interest in baseball is similar to the interest many of us find in investing. Undeniably, there is excitement in strategizing, analyzing, searching out, and discovering possibilities. While the outcome is uncertain, our (Jim’s and my) opinions are based on hours of research and a lot of work. Neither of us has to be very smart to do what we do, we just have to spend a lot of time doing it. (Funny, I tell my 9 year old son Jacob the same thing about his homework.)

Jim doesn’t get paid for the hours he spends obsessing about baseball, poring over stats and listening to the “experts” evaluate the possible outcomes. (Come to think of it, I didn’t get paid for doing a similar thing with investments early in my career!) The point is, for Jim and me, it’s not about getting paid, it’s about doing what we enjoy. What we enjoy, we do well.

Jim has a keen understanding of the fine points of the game of baseball, seeing things that I do not. He recognizes great plays, mistakes, and opportunities that I miss. His predictive skills and judgment are based on his knowledge and experience about baseball. Similarly, my studies of financials and analyst reports give me insights into which management teams are posed to succeed in the next few years.

Clearly, there is a serious aspect of dealing with other people’s money. Having so many people place their trust in you to do the right thing when you’re not always sure of what’s right is a huge responsibility. But the seriousness of it should not preclude the fun of it. Even in the sanctity of church, my parish priest still tells the best jokes.

I know that Jim had a tough time when the O’s had a difficult September. But he may not know that September has historically been the worst month of the year for investment performance. Sometimes it’s difficult for Jim and me to keep a long-term perspective, when the O’s are losing, and we have 100-200+ point down days, as we had this month. But it doesn’t keep us from enjoying the success of the teams we follow.