World Series Investing

It's only a game. Baseball is only a game. Bats crack. Balls fly. Nine innings -- or more -- later, you have a winning team and one that lives to play another day. But there is no other game that has left its imprint on investing quite the way that baseball has.

While one can argue that football has overtaken baseball in pastime popularity, it certainly doesn't feel that way on Wall Street. The market has more to do with diamonds than gridirons. Don't believe me? Watch your language.

More than words
A company reports a stellar quarterly earnings report and we say that it hit it out of the park. An investment appreciates and it circles the bases. Double. Triple. Homerun. But you can't let the game's base-path logistics get in the way of a good analogy. We keep running around in pursuit of the legendary 10-bagger -- and then some.

We find companies swinging for the fences. We have short sellers trying to dodge squeeze plays. When greedy execs raid corporate financials, we say they were caught stealing. Okay, scratch that last one -- but you get the point.

Football elbows its way into the investing lexicon, too. Financials get fumbled. Goals get booted. Events play out over quarters. But just because a company reports its numbers every three months doesn't make it a post pattern. As bad as some boardrooms get, you never hear about a company lobbing a Hail Mary. Companies don't huddle.

They don't step up to the line of scrimmage. They step up to the plate. They don't snap the ball. They take their swings. They don't call up a bench-warming backup signal caller. They switch pitchers. They bring in a pinch hitter.

For the love of numbers
It starts when you're young. For all the talk that baseball has become a game of oversized paychecks and gargantuan owner egos, you'll always see that kid, a dozen rows deep in the bleachers, following the game, pencil to the scorecard.

I would argue that behind every great investor there was a kid who bought baseball cards to absorb the statistics on the back before even pondering the collectible value. For every person that grows up with the gift to dissect cash flow statements rests an inner child that went to school with ink-blackened fingers after devouring the box scores in the morning paper.

Baseball, like investing, is numbers personified. Sure, they're marinated in personality and coated with human emotion, but when you get down to it, it's only numbers. Grand ones but numbers nonetheless.

That's why if a baseball player grandstands at the plate, points his bat to the cheap centerfield seats, no one takes him seriously if there's a big .154 batting average beaming from the scoreboard. Every ballplayer wants to be the next Babe Ruth or Hank Aaron, just like any upstart wants to be the next General Electric (NYSE: GE  ) or Microsoft (Nasdaq: MSFT  ) . But numbers don't lie. Whether they are deep fiscal deficits or nosebleed earned run averages, past results temper future expectations.

The on-deck circle of life
Michael Lewis' Moneyball has become a boardroom bestseller as business minds are starting to realize that companies can learn a lot by studying how winning baseball teams use statistics -- the right statistics -- to create an advantage. Launching a campaign to promote an unexpected investing guru, Serena Maranjian took a look at some sage money managing advice put out over the years by the colorful former catcher of the New York Yankees, Yogi Berra. It's a great read.

Still skeptical? That's fine. I realize that if understanding baseball were the root of all success, trading card specialist Topps (Nasdaq: TOPP  ) would command the largest market cap in the world. We wouldn't ridicule companies like Disney (NYSE: DIS  ) , News Corp. (NYSE: NWS  ) and Tribune (NYSE: TRB  ) for their pro baseball pursuits. No, we would be envious of their ability to lock in learning institutions as loss leaders.

But just as surely as this week's World Series will bring about new heroes, goats and endorsement deals, it will also be a teacher to those that yearn to learn. It's a numbers game. Only a numbers game. But my, what grand numbers those can be.

Rick Aristotle Munarriz still hasn't secured his World Series tickets to see his hometown Florida Marlins play, but he was at Game 4 of the National League Championship Series last week. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.


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