Cleaning House

The title doesn't refer to me removing the dead wood from YumanityCo and ensuring this ship runs efficiently and productively because that's what the thousands of shareholders deserve. It actually refers to what I did today. I was a domestic dynamo - what with the laundry, the dishwasher, the vacuuming, the lawn mowing, the foliage trimming and the Swiffering. I always work hard when I'm watching a good football game. The pauses in the action give me plenty of time to monitor the bleaching of the whites and yet still keep me motivated, thanks to the needless violence on display.
The game I am referring to was Baltimore v. San Diego. The Chargers played well until the end when they got far too conservative, a situation that happens roughly every other game for the Bolts. My favorite moment was when the announcer, Kenny Albert (I think it was him, it could have been someone else, Kevin Harlan, maybe?) said, and I quote: That's why Marty Schottenheimer has more wins than any other active coach! The play Albarlan was referring to was having the punter step out of the back of the end zone to take a safety. Yes, Harlbert, Marty has accumulated all those wins because HE SCORES POINTS FOR THE OPPOSING TEAM! It was a bad choice, in my opinion, by Marty because it started the Chargers into their usual "protect the lead, try not to lose" mentality that kills them. When they attack, they succeed. When they don't, they fail. That memo apparently was lost on the way to Marty's desk. Bill Callahan needs to get the same memo. I figured the Kansas game was over by halftime, so the female companion and I chose instead to watch Mrs. Henderson Presents (that Dame Judi Dench is a firecracker!) instead. When the movie was over, I flipped back to catch the final tally of the drubbing and instead (egad!) found overtime. Thankfully, things turned out well, but I'm sure that second half was not fun to watch.
I really didn't want this post to be about sports, but now I've wasted all of this time and no one is still reading. But my comments about the shareholders and Nebraska leads me to the book I've been reading, Buffett: The Making of an American Capitalist. Obviously, I knew Warren Buffett had done well in the stock market, but this book offers startling statistics about how successful he was. When other money managers were having difficulty simply keeping up with the Dow Jones, Buffett was destroying it -- routinely. From 1957 to 1966, the Dow was up 122.9 percent. People with money in what was then called the Buffett Partnership during that same period had their money increase by 1,156 percent. A few years later, when Buffett took over Berkshire Hathaway, it was at 18 per share. by 1983, it was up to 775. By the end of that single year, it was at $1,310 per share. This meant Buffett, while still a cheapskate in his personal life, was worth $620 million.
The book chronicles how even though Buffett had such success, Wall Street normally considered him as either an idiot savant or the luckiest man ever to have been born. While he has a genius with numbers, neither of these appelations appear to be true. The book also explodes the lie that what Buffett did was somehow "simple." He shied away from securities plays that were complicated on the premise that he wouldn't put his money into anything he couldn't understand. And he focused on stocks that he considered undervalued that had plenty of room for growth in the future. He did buy and hold, but his focus was only on buying that which would be worth holding.
To return to the world of sports, one could draw a parallel between Buffett and Billy Beane, who as general manager of the Oakland Athletics, uses roughly this same logic (i.e. find what your particular universe is undervaluing and buy it at a price that is affordable) to compete in a competitively unbalanced league. The A's are in the playoffs this year to play the Minnesota Twins, another small market franchise. One of those two teams may face the New York Yankees, who have so much money that value is of little importance.
In fact, in Michael Lewis's book Moneyball that chronicles Beane's methods, Beane is quoted as saying one of his favorite quotes is from Buffett: "The hardest thing to find is a good investment." (I think Moneyball should have had more about Buffett because of this similarity I'm mentioning.) Buffett's genius was that he was willing to wait for a good investment that met his requirements, no matter how long it took. He would sometimes go a year or so without buying any stock. Beane doesn't have that same luxury - if his good players leave in free agency, he has to have replacements in a few months for the start of the next season, whether there are good buys available or not. This year, the Big Hurt Frank Thomas has been to Beane what Geico was to Buffett - the once proud and successful commodity that had fallen on hard times but still had the talent that helped it achieve in the first place. I think Eric Chavez is Coke, the buy that everyone thought was good, but no one jumped on, thinking it had already hit its ceiling. I think Barry Zito is Capital Cities or Salomon Brothers. Huston Street is Nebraska Furniture Mart. Nick Swisher isBerkshire Hathaway, the textile mill that started everything. Anyone who has read Moneyball knows how Beane lusted after Swisher. I think I should give every A's player a Buffett stock, but I think I've already tested the patience of my reader(s) enough.
The next book on my reading queue is another Michael Lewis book, Liar's Poker, about Lewis's time working at, yes, Salomon Brothers.
(It all fits together.)