Wednesday, November 15, 2006

Lewis on sports ... and investing (sort of).

A few years ago, Michael Lewis, famed author of the classic Liar's Poker, put out another great book, Moneyball, that has since inhabited that odd space where sports, investing, statistics, and leadership collide. Lewis is back at it again, out on the PR stump for his newest book, The Blind Side, that covers undervalued players in football.

From a recent interview with Fortune, a few quotes that are highly applicable to the search for value, whether that comes in the form of a stock that's getting beat up by the Street, a catcher with a great eye for the strike zone that scouts think is past his prime, or a poor kid from the innner city who manages to make it big in the NFL.

On Billy Beane and how he manages to still outperform, even though his "value" approach is common knowledge:
He is still measuring baseball players' value more precisely than other people and buying the ones where the market price was cheaper than their true value ... He has a real ability, like a really gifted trader, to act on his own judgments. This is painful for most people to do, because they face ridicule and ostracism. I think intelligence is overrated as a quality central to this kind of innovation. It's a kind of nerve. It's the ability to take a risk.
And on achievement and creativity:
Nevertheless, the evaluation you do of yourself has to be independent of the world's evaluation of you. The pressure's always going to be to draw you back into doing things the way everybody else does them. Doing things differently is inherently threatening to people because if it works, it's damning of the way they've been doing things.
Sound familiar? It should. Good ideas never go out of style.
"Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it - even though others may hesitate or differ". (You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.)
- Benjamin Graham, The Intelligent Investor