Life Is Not An All-Star Game And Investing Is Not A Home Run Derby

162.  That’s how many games are played in the regular season of Major League Baseball.  There’s only one All-Star Game—in the middle of the season, played last night—and it’s rightly referred to as a break for the sport that requires more endurance than any other.

Life has come to look too much like an all-star game, with our greatest hits trotted out on LinkedIn, Facebook, Twitter, Instagram and more.  And while social media has made it easier to craft perception, we’re often putting the face on just the same at networking events, church (especially church) and family parties.

Façade creation is expensive.  It’s inherently limited to the external, the material, and almost always comes with a price tag.  It also tends to degrade, both in appearance and value.  How much time, effort and money do you expend on your perception engine?

No, life is not an all-star game.  It’s grinded out over long and arduous seasons, filled with many highs and lows and sleepless nights spent picking fiberglass-laden tobacco out of our teeth contemplating an oh-for-five game, imagining how we can do better next time.

The highlight for many of the All-Star break, however, is the Home Run Derby, where the game’s biggest sluggers do their worst to cream-puffs tossed by coaches.  It’s like batting practice on steroids (pun intended), complete with no fewer than 47 “Back, back, back…and it’s gone!” calls from the Swami himself, Chris Berman.  Quite the spectacle.

Too many investors, however, emulate home run derby strategies in their process, swinging for the fences on every pitch.  This is problematic for at least two reasons: First, the market’s not pitching balls at half-speed right down the middle.  There simply aren’t any no-brainers (Apple) or sure things (real estate).  The second reason concentrating your investing on the long-ball is a bad idea is that, well, you’re probably not an all-star.  I mean no offense—neither am I.  But I’ve been around the business long enough to see (brilliant) grown men brought to tears, exasperated by the apparent futility of their efforts.  I know enough to know that I don’t know enough to be a big-league stock picker, and I’m ok with that.

Unfortunately, many on Wall Street have a tendency to overestimate both the power of their swing and their knowledge of the game, and I’m not just talking about the overwhelming majority of mutual funds that underperform their benchmark.  Bill Miller, manager of the once-vaunted Legg Mason Value Trust (LMVTX) struck out at the plate so many times in 2008 (most notably in his all-in bet on Bear Sterns) that he inflicted systemic damage to the fund and the very firm he helped put on the map. As investing success persists, it seems, hubris inflates, making these minted sluggers ever more likely to end up walking back to the dugout with their heads hung low.

I’m not just talking about stocks, bonds and mutual funds as investments, either.  It’s even easier to deceive ourselves into thinking that an expensive degree or a home priced out of our reach are worthy of a home run swing.  Let’s, instead, make a practice of getting on base repeatedly, and allowing someone else’s luck or error to drive us home.

Chris Davis leads the major leagues in home runs with 37 only half-way into the season, but he admitted that it wasn’t actually Oriole Magic (or steroids for you haters).  “It was more about consistently putting the bat on the ball, not swinging at balls 14 feet out of the strike zone.”  That’s good advice, for baseball and investing.

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