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Notre Dame's Head Coach Should've Listened to Warren Buffett
An article about simplicity and the art of not shooting yourself in the foot.
On Saturday Night, September 23rd, I sat down to watch Notre Dame play Ohio State. #9 vs #4 and it did not disappoint.
With about 4 seconds left on the clock, OSU’s offense was only about 6 inches out from scoring the game-winning touchdown.
As both teams lined up for the final play Notre Dame’s defense was heavy on the right and only a few on the left, this left a weakness that was exploited as the running back pushed forward and barely inched his way in for the score.
It was devastating for ND fans.
But the detail after the game was downright embarrassing.
As the coach of Notre Dame came into the post-game press conference, one of the first questions he answered was, did he know that his team ran the last two defensive plays with 10 men on the field?
During the biggest series of the game, the #9 ranked team in the nation played with a preventable handicap. And guess where that extra player was supposed to be.
On the left side of the defensive line. Right where they ran the ball.
“Play Like a Champion”
When the players at ND leave the locker room to run out onto the playing field it’s tradition to slap the sign above the doorway that reads “Play like a champion”. This is a notorious symbol in the sports world and Warren even has a similar sign in his office
I remember listening to an annual meeting a few years ago, if I had to guess it would have been one of the meetings following a Nebraska Football national championship, where he made a silly joke,
“The sign above the players' entrance to the field at Notre Dame reads 'Play Like a Champion Today.'
I sometimes joke that the sign at Nebraska reads 'Remember Your Helmet.' Charlie and I are 'Remember Your Helmet kind of guys.'
We like to keep it simple.”
This little anecdote came into my head when I read about the mistake.
The message he was trying to convey was how the greats are not the ones who can play their best all the time, but what makes them great is their ability to do the little things right consistently.
Would the outcome have been different if they had their fourth down lineman on the goal line during the last play of the game? Who knows, but I bet the Head Coach of ND would have killed to have all his players on the field for the final two plays.
It was an unforced error that could have swayed the outcome. But now, ND has dropped from the pack of unbeaten and now has to run the table to be considered for the championship playoffs.
“Don’t Forget Your Helmet”
It is natural for humans in competition to push to win.
When you ask even the most ambitious of fund managers they shoot to be in the top 10 or even 5% every year. The problem with this is that when you decide to pursue the top echelon of performance you often become your own worst enemy.
“It turns out that most investors aiming for top decile performance eventually shoot themselves in the foot. Dave never did” - Howard Marks, Fewer Losers, or More Winners?
The Dave he is referring to is David VanBenschoten who was the head of the General Mills Pension Fund for 14 years. During his tenure, the fund never was never above the 27% percentile and never below the 47% percentile in performance for any one of those years. From an outside view, this looks like average to subpar performance. But it wasn’t.
When Dave hung up his cleats at the end of the 14 years his overall performance put him in the 4th percentile of performance.
For most of my investing career, especially when I left school, I wanted nothing more than to make the investments that would put me in the top percentile. This came with a warning.
When you shoot for the top percentile it means you will make mistakes that put you in the bottom percentile.
This was a risk I accepted without a real understanding of what that meant. Well, after sitting on 4 years of okay performance, the lesson has sunk in and as I have grown more into my adult life and lost plenty of money, I am done shooting myself in the foot (hopefully).
The Nebraska Football Motto is the perfect way to think about investing well.
Investing well is taking care of the simple things over many iterations. Getting them right, consistently, over a long enough time frame will likely put you in the upper echelon of performance and you won’t have had to risk life and limb to achieve it.
Here is a list of 6 simple pitfalls to avoid if you want to invest well
Stay away from Criminals and Cheats, self-explanatory.
Be wary of large debt loads, it is a widow-maker
Ignore Companies that rely on M&A for growth, most of them fail.
No Turnarounds, Buffett avoids them and you should too.
Fast-changing industries are unpredictable with no barriers to entry.
If management has no skin in the game, you shouldn’t either.
The risk you are taking when you follow a list like this means you will be making a lot of mistakes of omission. You will miss the huge returns created by those big winners that always look certain in hindsight but were not so much at the time of purchase. You will miss Tesla, Netflix, Nvidia, and even Amazon during the early years.
You will, however, reduce your mistakes of commission. But here is a little secret, mistakes of omission don’t lose you money, mistakes of commission do.
Investing well is not sexy.
It won’t get you any serious recognition and probably won’t put you in the top percentile of performance. But it will keep you out of the bottom percentile and if we stay away long enough, we might end up where we were trying to go anyway.
I am willing to bet the odds that we see Notre Dame play each down of football with the correct number of men on the field for the remainder of the year is much higher now than it was before Saturday. We learn by mistakes and the hope is that the mistakes we do make don’t kill us.
Pushing for a win in a competition can leave one vulnerable to making simple mistakes as your focus leans more to chasing victory rather than defending against defeat.
On the football field, it is a long chess game and when you compete at such a high level the outcome is rarely determined by who played the best but more often than not, which team made the most mistakes.
But let it be known, there are opportunities to swing for the fences and to go for the knockout punch.
When the market is falling and all of the stocks on your watchlist are selling at prices well below their intrinsic value, it would be smart to push more chips on the table at this moment. But when on a normal day, there probably is nothing to do.
This same sequence can be seen played out on the football field. When you have a healthy lead and need one more score to put the nail in the coffin, it might be time for a deep ball against a second-string cornerback.
There are times to go for the win, but these moments only present themselves after a long string of events where minimizing mistakes was the focus. Pushing for the win at the wrong moment can prove to be fatal.
Do the simple things right, focus on the downside, play to survive, and “Don’t forget your helmet”.
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Please be advised, Wall St Gunslinger is not an investment adviser and does not give personal investment advice. All content is for educational and entertainment purposes only and should not be interpreted as anything other than such. Investing entails a lot of risks and should be managed appropriately. Please do your own research and consult with an investment professional before making any investing decisions. Thank you.