Tthesis:
Coach Bill Belichick of the New England Patriots is one of the best football coaches of all-time and his ability to find value in the NFL Draft holds many lessons for investors.
Method to the Madness: How Belichick Rules the Draft
Patiently waits for opportunities:
“Bill Belichick is smart, but sometimes he succeeds just by aiding other teams' efforts to be stupid.”
There are times when the market presents unbelievable opportunities to profit (like in the financial crisis of 2008), when many investors were panicking.
The hard part is to be disciplined and wait for opportunities. The patient investor wins when the Mad money crowd is panicking.
“Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now.”
The patient investor wins when the Mad Money crowd is panicking.
Today's Market:
It's a difficult market due to the premium valuations we see. This market requires discipline to wait for better opportunities. Due to the Fed intervention in the market, assets are fully valued. And a return to normal interest rates may reward the patient investor with better opportunities. However, there are strategies that work in an overvalued market.
(via the federal reserve)
Doesn't hold overvalued players: cuts losses quickly
“Bad teams spend heavily in free agency and hold on to their players out of nostalgia far too long,”
Cut losses and have no favorites. Eddie Lampert is a great investor, but his performance in Sears Holdings (SHLD) was clearly not his best investment. When the situation changes, investors would be wise to not play favorites.
Understands valuation:
“Perhaps the most common characteristic of bad organizations is that they make a habit of giving away draft picks to trade up and acquire a player with an earlier selection.”(via Grantland)
