Friday, November 1, 1996
Baseball and Investing
by Doak C. Procter, IV ([email protected])

I'm sitting here watching the World Series, and I'm sitting here thinking about some of my investments, and it hits me: Investing, especially in stocks, is just like baseball. In order to succeed and enjoy it, you must use your head, as well as get used to a bunch of numbers and stats and new vocabulary, and, every now and then, you have to stand up and swing and be tough about it.

What kind of person succeeds in baseball? What do you hear those guys on the radio or television talking about? Have you ever heard them say something like this? "Boy, that guy is a true baseball player, and I mean it. He swings at just about everything that comes near the plate, doesn't he? Especially the ones the catcher tells him are gonna be good ones, no matter what they look like! Kids, watch closely at home, because this is how you make it to the big time." Of course not.

You hear about the guys who study the game and the players, who keep their eyes on the ball, and who wait on a good one before they swing. It's the same way with investing, isn't it? You just can't throw your money into every pitch you get from your broker or (possibly foul) tip from your friend.

You need to check out the stock, as well as the business. You don't swing unless it looks good, really good. And you keep your eyes on the ball, just in case. Then, you gear up, and you swing! Or, at least, you place an order with your broker. In any case, you've committed for better or for worse.

Sometimes you hit fairly, and you end up with a nice single, or even a double. Sometimes you clear the center field fence by a mile and get to dance around the bases. Sometimes you strike out and your average slips. And, sometimes, the ball comes off the bat very wrong and breaks your foot.

No matter what, whether you limp back to the dugout or are carried back on your teammates' shoulders, you better remember that swing. If it was a good one, look back at what you did right, and try to do it again next time, but don't forget that you might have been a little lucky. You wouldn't want to go thinking you are Hank Aaron just because you tagged one hanging curve. If you swung and missed and ended up on your butt, get up and dust yourself off, find out what you did wrong, and don't do it again. Don't get discouraged, especially when that ball moves in a way no one could have predicted.

It all works the same way with investing, of course. Sometimes you get lucky and get into the right stock, but for the wrong reasons, and sometimes what really looks like the right company nails you with a secondary offering or a bad acquisition or something worse. Win or lose, you will be coming to bat again, and you had better be prepared.

---Doak C. Procter, IV

Transmitted: 11/1/96