My wife and I went to see “Solo” the new Star Wars movie this past weekend. It was nice to take a break from parenting and spend some time together. We both really enjoyed the movie because it was fun and entertaining but mostly because it was Star Wars without being STAR WARS. It was an enjoyable night out for both of us.
I came to work on Monday and saw a number of news articles about the movie and its “disappointing box office” figures. Apparently making $100 million in a weekend is somehow a terrible outcome because it was expected to make $120 million. One of the most salient articles I read about this level of disappointment made a really great point. Not everything has to be a homerun. Solo did not need to make more for me to enjoy it. It was enjoyable regardless of that stat and that makes it a success to me [Editor: Sam is NOT footing the bill for the production costs so he can say whatever he wants]
Not. Everything. Has. To. Be. A. Homerun. What a thought and something that should translate to investing. You don’t need to find the next Apple. You don’t need to chase for big performance. You probably don’t need to listen to that tip from your cousin’s boyfriend’s barber; unless it’s about going with that baby blue faux-hawk- then yes, please listen to the expert and don’t do that.
Success in investing is about having enough chances to get a lot of hits. Slowly growing your portfolio is much easier than always swinging for the fences every time. The biggest homerun hitters in baseball are often the ones that strikeout the most too. Aaron Judge of the New York Yankees led the league in homeruns (52) and strikeouts (208) last year. If you are only getting big hits 25% of the time and getting out the other 75% of the time you will make good money with the Toronto Blue Jays but not much money on the Toronto Stock Exchange.
That is why I prefer to hit for the cycle. {Editor: In baseball, “the cycle” is hitting a single, double, triple and homerun in a single game} Taking more chances to make a good return almost always works out better in the long term. It’s less volatile which means you are more likely to stick with it because you won’t strikeout as often and that is the key to long term success.
In the end, I was happy seeing a movie about a character I have loved since I was a small boy. It wasn’t a huge blockbuster and likely won’t be but it was a good solid movie and that is a good lesson for all of us when it comes to our portfolio expectations.