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3 Short Stories with Investing Lessons: Apollo 11, NFL's "West Coast Offense," & Chris Rock's Process

July 27, 2024

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Read Time: 5-minutes

Today, we’re going to look at 3 short stories from outside the investment industry that hold lessons we can apply to investing (& the rest of our finances).

Let’s check them out…

Apollo 11

Apollo 11 was the first time in history humans visited another celestial body.

You’d think that would be an overwhelming experience – literally the coolest thing any human had ever done. But as the spacecraft hovered over the moon, Michael Collins turned to Neil Armstrong and Buzz Aldrin and said:

“It’s amazing how quickly you adapt. It doesn’t seem weird at all to me to look out there and see the moon going by, you know?”

Three months later, after Al Bean walked on the moon during Apollo 12, he turned to astronaut Pete Conrad and said “It’s kind of like the song: Is that all there is?” Conrad was relieved, because he secretly felt the same, describing his moonwalk as spectacular but not momentous.

New becomes normal faster than you think.

2 ways this shows up in our investing and personal finances:

  1. A speculative investing trend soon becomes widespread and not participating is viewed as odd.

  2. A raise in your salary and standard of living quickly becomes unnoticeable.

The antidote?

For the speculative investing trend, remember:

When taking for granted your new standard of living: Develop a gratitude practice that works for you. Consider asking yourself (h/t: Dickie Bush):

“What’s one thing you have today that you would have begged to have had 3 years ago?”

NFL’s “West Coast Offense”

In 1968, Bill Walsh became the offensive coordinator of the Cincinnati Bengals. The Bengals were an expansion team—they got the players the other NFL teams didn’t want. And because he had a roster full of “comically inadequate players,” Walsh created a revolutionary NFL offense.

In the late 1960s, NFL offenses were built to primarily run the football. To stop the run, defenses were full of big, strong, physical, and mean players. So, it was clear to Walsh: the newfound Bengals would have to rely on passing the ball.

Here, there was another problem: Walsh’s quarterback, Virgil Carter, had a terrible arm. “Virgil,” Carter was once told, “if you want to throw the football more than 20 yards you better fill it with helium.”

Embracing Virgil’s anatomical weaknesses, Walsh developed what is now known as The West Coast Offense: an offensive playbook full of passes thrown to wide-receivers who ran precise routes to exacting spots within 12 yards of Virgil Carter. “No helium was required,” Walsh joked.

The West Coast Offense was immediately effective. In 1970, the Bengals won the AFC Central Division, and after a few years of consistent success, in 1979, Walsh became the head coach of the San Francisco 49ers—then the worst team on the NFL.

With their third-round draft pick in the 1979 draft, the 49ers selected Joe Montana, a quarterback “who everyone said was too small and had too weak an arm to play in the NFL,” Michael Lewis writes in The Blind Side: Evolution of a Game. In Walsh’s system, Lewis continues, “[Montana] would become, by general consensus, the finest quarterback ever to play the game.”

In the early 1980s, other NFL teams began poaching Walsh’s assistant coaches, and by the mid-2000s, one General Manager said, “Everyone in the NFL today runs Bill Walsh’s offense.” “It all started,” Walsh said, “When I was forced to use Virgil.”

Play to your strengths and—as importantly—turn your opponents' strengths into weaknesses.

One way to do this in investing:

Large money managers have an Achilles' heel similar to big defensive players: their size.

Investing in a small company isn't going to materially impact their portfolio.

Even Buffett can't overcome the laws of mathematics:

“Size did us in. … There remain only a handful of companies in this country capable of truly moving the needle at Berkshire…”

So small companies are neglected by some of the most experienced investors.

Which may present opportunities for "smaller" investors:

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Chris Rock’s Process

I [Jerry Seinfeld] was with Chris [Rock] a couple of weeks ago, and he was talking about a young comic.

He was asking the comedian about what he did that day. And the guy said, “Nothing. But I’m going to do a set tonight.”

And Chris explained to him, “You make money during the day. You collect it at night. During the day is where the money is made.”

Profits come from preparation.

Or as Charlie Munger put it:

Buffett likes to say he doesn't get paid for activity, only for being right. The key is recognizing how Buffett is defining activity:

He doesn't get paid for endless trading. For making continuous tweaks to his portfolio…

But he's always actively preparing: reading, thinking, & analyzing.

Then, when opportunity presents itself—he pounces.

This idea extends to after you've acquired a position as well.

Technically, you recognize profits once your sell order goes through.

But, again, that's just the payoff.

You earn the payoff in the waiting:

Preparation and patience are what pays.

Well, that's all for this week.

I hope you found it valuable.

See you next Saturday.

Two resources I think you might like:

  1. Book Summaries: One of the most important lessons from Charlie Munger is to strive to become a little bit wiser each day. To accelerate my learning on everything from investing & decision-making to negotiating & habit-building, I use Blinkist (I don't receive any compensation from Blinkist currently). Blinkist offers easily readable book summaries to help you get the most valuable ideas from the most popular books. You can check out Blinkist here.

  2. Mental Exercises: To paraphrase Morgan Housel, the common factor among elite investors is they have complete control over the space in between their ears. Financial news networks and social media can create a lot of "noise" for investors. To stay focused and calm, I like to use Headspace (I don't receive any compensation from Headspace currently). Headspace offers mindset and breathing exercises to help you keep control over the space between your ears. You can check out Headspace here.

Disclaimers

This material is not investment advice. No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading this material can be accepted by the publisher. Additional disclaimers here.