When is doing too little still doing too much?
Executing nothing is a viable strategy.
In some aspects of life the more you do, the worse the outcomes. In others, it’s the opposite.
Let’s take a look at two contrasting examples, baseball and investing.
I used to be a big baseball fan but I am starting to despise the game.
The main reason is an appalling lack of effort by the players.
Players make an average of $5.34 million per season. Running to first should be non-negotiable. It takes a runner a little over 4 seconds to go ninety feet down the line.
In a typical game, a batter gets about four at bats. At most, 17 seconds of full out sprinting is required.
Amazingly, most runners 90% of the time jog leisurely to first when they are all but certain the opposing fielder will cleanly make the play.
What galls me the most, if pros decide there’s a prayer of beating the throw to first, they miraculously transform into Usain Bolt in a desperate bid to increase their batting average.
Never mind the fact, running full tilt in each at bat, would boost the probability of a fielder rushing the throw and making an error. This would help their team’s chances of winning but decrease their batting average since reaching on an error doesn’t count the same as a hit.
Selfish selective effort is all the rage. The same goes for players who pose at the plate admiring their work thinking they’ve walloped prodigious homeruns.
Many times this Pimping ends with them standing embarrassingly on first base after their 400 foot blast clanked off the wall.
I don’t even want to get into the recent NY Yankees Lollipop Gate Controversy. Evidently, it takes a sugar rush to garner the effort to jog to first base.
Contrast this to a sport like football where Wide Receivers are often asked to sprint 4o yards down field as decoys. BTW don’t forget to block the 260 linebacker on your route.
In baseball more effort leads to better outcomes and a more enjoyable fan experience.
Investing is another story.
I was speaking with someone the other day and they told me they put about 30k away for their child about 25 years ago. They just left it there and now its worth near $500k.
Doing the math math in my head, this made perfect sense. Applying the rule of 72 (Dividing 72 by the investments return tells you how fast the funds double over time.)
Let’s assume the money was put in a S&P 500 like investment and had a 10% average annual return the invest would double every 7.2 years. (72 Divided by 10.)
Voila!
Over this period, zero energy was expended to juice returns. Interrupting compounding is a terrible way to build wealth.
Unlike baseball where hustle generates extra wins, in investing the opposite holds true. Things like timing the market, using leverage, making concentrated bets, and stock picking tend to end in disaster for the average investor swimming in waters too deep and treacherous for their skill level.
Sometimes it takes a lot of energy not to work.
Sprinting around the investing bases increases the probability of being tagged out.
Sometimes laziness pays the highest dividends.
