To Invest, Think: "Sweet Spot"
Did you know that you can learn a valuable lesson about investing from looking at sports? In his book, "The Science of Hitting," Former Red Sox player Ted Williams said the most important thing when trying to hit a baseball is to wait for the right pitch. You have to know where your "sweet spot" is - the place where you love to hit the baseball.
A sweet spot in investing, just like in hitting, is when you gain an edge by getting just the pitch you want.
Investing is the greatest business in the world because you never have to swing. You can just stand at the plate, and the pitcher throws you Amazon at $978, Starbucks at $55, Tesla at $355 and L Brands at $37 and nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like...one that's right in your sweet spot.
In contrast, there are called strikes in baseball, so you have to swing at strikes, even if they aren't the pitches you like. You must swing at anything close to the strike zone or risk striking out.
The great news for investors is that you don't have to swing at every pitch.
Think for a moment about your own life, and what you understand. For example, do you have a deep understanding of:
- Retail, clothing, fashion, or design
- Biology, healthcare, or medicine
- Food, restaurants, cafes
- Technology, computers, hardware or software
- Scientific research, chemistry, physics
- Transportation and logistics
- Wine and beer
- Banking and finance
- Photography or electronics
Well, if you have expertise in one of those areas, then your understanding is deeper than most. Your current job, or your education might give you insights into industries that give you an edge.
BUFFETT'S ADVICE ON GETTING RICH
- When visiting college students, Buffett often gives advice on how to get rich.
- Buffett says that he can improve your ultimate financial welfare by just giving you one piece of advice.
- This advice is so useful that I've copied it onto a small card. To get your own free copy of this card, just fill in your name and email address.