The Sports Analogy—The “Experts”
A lot of people out there are scared away from learning about finances or investing. I understand, it’s all very complicated and the people on TV yelling and screaming about the markets and P/E ratios and earnings and so on don’t do anything to help.
There is so much information out there and so many “experts” talking their heads off that it can be overwhelming.
How can I invest successfully if I can’t even understand what these people are saying?
Well, I’m not going to tell you that you don’t need to understand it all, because you do. You need to know the basics before you get started. But otherwise, there isn’t that much more you need to know. Don’t be scared away by these so-called experts because, most of the time, they can’t do much better than you or I can.
Don’t believe me? Think of something you know very well. Something you know inside and out and have been doing for a long time. For some of you it may be a sport (watching it counts) or something like cooking, history, whatever.
Now try to find some “experts” in that field. Since I’m thinking mostly of sports for this analogy, that’s what I’ll stick with. More specifically, baseball.
Because I’ve played baseball virtually my whole life and because I like to read about it, talk about it, and watch it, I’ve become a very knowledgeable person. And the following scenario plays itself out more often that you would think: someone on ESPN or FOX will say something about a team, a player, or a trade and I will just drop my cereal bowl and wonder, “What?”
Specifically, I’m talking about guys like Joe Morgan (a former player turned announcer), Steve Phillips (a former GM turned analyst), and Dusty Baker (a current manager). There are many many more.
Now, isn’t that strange? Someone on ESPN talking about baseball doesn’t know what he/she is talking about? It’s not strange, because these people—despite their experience and know-how—are only giving their opinions. And many many times their opinions are on the verge of being ridiculous.
I could go on and on about this topic but this isn’t the right venue for it. But I do want to give one specific example just so you know I’m not full of it or haven’t given this enough thought.
When Dusty Baker was the manager of the Chicago Cubs, he was asked about getting his players to walk more (the importance of this is thoroughly discussed in Michael Lewis’s brilliant book, Moneyball). His response?
On-base percentage is great if you can score runs and do something with that on-base percentage,” Baker said. “Clogging up the bases isn’t that great to me. The problem we have to address more than anything is the home run problem.”
“Clogging up the bases” will survive in infamy forever. Fans around the world slapped palm to forehead and muttered, “This is our manager?”
My point here is that a Major League Baseball manager that is often called one of the game’s best said something that makes absolutely no sense. What makes you think the talking heads on CNBC fare any better?
They don’t.
And it’s an important thing to know, because often times these experts are the ones trying to encourage bad decisions or stoke fears because they aren’t in the financially responsible business, they are in show business.
What topic are you an “expert” in? Have you seen “experts” say stupid things about it? Do Share!
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