One great thing about summer is that there is more time to read, and not just about investing. I just finished both a biography and autobiography about baseball legend Satchel Paige and found some great investment wisdom contained within, although much of it was not intended as such.
Satchel Paige may have been one of the greatest pitchers ever, pitching thousands of games in various leagues from 1927 until 1966 during winter, spring, summer and fall. Unfortunately, he spent less than five years in the Major Leagues due to barriers against black ballplayers that were not lifted until he was 41. It looked like it was too late for him by then. But Cleveland Indians owner Bill Veeck signed him to a contract in 1948, and the 42-year-old "rookie" went 6-1 that year, helping lead the Indians to a World Series title. In 1965, at the age of 59, he tossed three scoreless innings for the Kansas City Athletics, a feat that still seems unbelievable. It was made all the more extraordinary by the fact that Paige gave up just one hit, to future Hall of Famer Carl Yastrzemski.
Among the great pieces of wisdom attributed to Paige are "Satchel's Rules for The Good Life," six nuggets that also seem to apply well to value investing, using a great deal of poetic license, of course.
- "Avoid fried foods 'cause they angers up the blood." Translation as it applies to value investing: Avoid value traps, companies that appear cheap but really are not. Unfortunately, sometimes they are as difficult to avoid as fried foods. They sure look good at the time, but can hurt later.
- "If your stomach disputes you, lay down and pacify it with cool thoughts." Translation: Don't get too caught up in the ups and downs of the markets. Don't overreact to news, stay cool, keep a clear head and relax.
- "Keep the juices flowin' by janglin' round gently as you move." Translation: Don't get too sedentary when it comes to your portfolio. Even if you are in buy-and-hold mode, stay in the loop as to what's happening with the companies you own. Stay informed, which does require effort.
- Go very light on vices such as carryin' on in society. The social ramble just ain't restful." Translation: Avoid the wisdom of the crowds; don't invest in the same things as everyone else. Be independent, which is not easy but can be rewarding.
- "Avoid runnin' at all times." Translation: Be patient
- "Don't ever look back. Somethin' might be gainin' on you." Translation: While it is wise to try and learn from your investment mistakes, move on. Don't focus on the mistakes; to do so can paralyze you.
Paige evidently made a lot of money over the years, but was also big spender, which is one reason he pitched so long. While he went 28-31 overall in the Major Leagues, from 1956-1958 he compiled a 31-22 record with the AAA minor league Miami Marlins while in his 50s. Just months prior to his Major League swan song in 1965 at age 59, his last child was born. Paige was elected to the Baseball Hall of Fame in 1971 and stands as a testament to perseverance.