Since 2002, I’ve found great joy writing birthday letters to my seven grandchildren, now ranging in age from 8 to 21. Most of the content is about them, a mental snapshot of who they are at that point in our lives that often morphs into a painfully long narrative for anyone under 25! Somehow, I manage to sandwich in an object lesson or two with which they might resonate a decade or two later. What follows is an excerpt from a letter to my baseball-loving grandson on the occasion of his eighth birthday.
…Returning to Ted Williams and baseball, he observed: “Hitting a baseball is the single most difficult thing to do in sport. What is there that requires more natural ability, more physical dexterity, more mental alertness? That requires a greater finesse to go with physical strength, that has as many variables and has few constants, and that carries with it the continuing frustration of knowing that even if you are a .300 hitter – which is a rare item these days – you are going to fail at your job seven out of 10 times?” What I found equally interesting was his comparison a great hitter to the premier basketball and football players and, particularly, to golfers like Sam Snead, Jack Nicklaus or Tom Watson. He essentially said that the top players in those sports are a dime a dozen compared to the small handful of baseball players who hit .300. He did mention something about golf that may be of interest to you. First, unlike professional baseball, you can continue to play it throughout your life. Secondly, the noted similarities in the swing which could, for you, transfer eventually from baseball to golf. Proper hip action, for one, applies to both sports as does the advantage of an inside-out stroke.
It just so happens that Warren Buffett was a Ted Williams fan. When Buffett wrote to shareholders in 1977, he lamented the shortage of good ideas. He said prices are high for both businesses and stocks. “Under these circumstances we exert a Ted Williams kind of discipline. In his book The Science of Hitting, Ted explains that he carved the strike zone into 77 cells, each the size of a baseball. Swinging only at balls in his “best” cell, he knew, would allow him to bat .400; reaching for balls in his “worst” spot, the low outside corner of the strike zone, would reduce him to .230. In other words, waiting for the fat pitch would mean a trip to the Hall of Fame; swinging indiscriminately would mean a ticket to the minors. If they are in the strike zone at all, the business “pitches” we now see are just catching the lower outside corner. If we swing, we will be locked into low returns. But if we let all of today’s balls go by, there can be no assurance that the next ones we see will be more to our liking. Perhaps the attractive prices of the past were the aberrations, not the full prices of today. Unlike Ted, we can’t be called out if we resist three pitches that are barely in the strike zone; nevertheless, just standing there, day after day, with my bat on my shoulder is not my idea of fun.”
In 1994 Buffett again referred to Ted Williams: “Nevertheless, we will stick with the approach that got us here and try not to relax our standards. Ted Williams, in The Story of My Life, explains why: “My argument is, to be a good hitter, you’ve got to get a good ball to hit. It’s the first rule in the book. If I have to bite at stuff that is out of my happy zone, I’m not a .344 hitter. I might only be a .250 hitter.” Charlie and I agree and will try to wait for opportunities that are well within our own ‘happy zone.’”
In terms of life’s lessons, one big takeaway for me has always been to be patient, waiting for the sweetheart pitch. Your grandfather wrote this in Decade of Delusions:
Many mainstream portfolio managers, judged as they are on short-term performance, feel they must be swinging all the time. They must focus on the present, on survival. If they don’t meet the relentless present demands, they’ll have no corner office from which to build a great long-term record. Individual investors—or the handful of advisors, such as your grandfather’s firm, who are granted substantial autonomy by their clients whose focus is on building wealth—who aspire to long-term success cannot afford the luxury of impatience (though they usually think the opposite is true). Rather, they must hold their ground in the batter’s box until the fat pitch comes over the plate. As Buffett says, “The stock market is [as is so much of life, Ethan] a no-called-strike game. You don’t have to swing at everything; you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’” Even Ted Williams (or Warren Buffett, for that matter) was not exempt from those cries. He simply ignored them, though not without considerable personal cost: Throughout much of his illustrious career, Williams was pilloried by the press [and booed by a hard-core contingent of leather-lunged Boston “fans”].