The San Antonio Spurs.
America’s most consistent and least celebrated sports dynasty. In no other sport has there ever been a team that is more successful, widely respected, more fundamentally sound and boring as hell at the same damn time. That’s why they’re the perfect model for your investment strategy. Follow me on this.
To watch the Spurs play basketball has been likened to watching poetry in motion. A thing of beauty…if you love poetry. But if you’re like the majority of Americans, you’re more likely to watch the Golden State Warriors or the Los Angeles Lakers than the Spurs. Despite the military mind of Coach Gregg Popovich and the killer instinct of Kawhi Leonard, the Spurs just don’t have the sizzle that get’s you excited. An alley-oop or no-look-pass is more exciting than a pick and roll. Similarly, we tend to lean towards flashy and sexier approaches to investing than the boring and proven tactics that could make or break your portfolio. Herein lies the problem.
Consider that since the 98/99 season the San Antonio Spurs have made the playoffs 24 out of 25 seasons. During that time, they’ve won the NBA Championship 5 times; more than any other NBA team. If this were investing; it would be the equivalent of a fund providing consistent double digit returns over two and a half decades, beating the S&P 500 consistently while touting the lowest expense ratio possible!
See what I mean? There’s nothing sexy about that statement when you use financial terms.
Yet, if you invested money consistently in a fund like the San Antonio Spurs shortly after the 2008 economic meltdown you might’ve tripled or quadrupled your value by now. However, if you’d invested that money in a fund like the Clippers, you would’ve enjoyed some playoff appearances, some absolutely incredible highlights along the way but ultimately would’ve fallen short of the real goal every.single.year. So this begs the question. How do I get that San Antonio Spurs money? The answer is passively managed funds such as index funds. Make them the basis of your investment strategy and you too may have a dynasty in the making. Here are four characteristics the two have in common- Discipline– Kawhi’s work ethic is second to none. He’s physically a freak of nature, his financial habits are worthy of praise and he’s perpetually unflinching. Like him, index funds are stable in the sense that they track the market as a whole. Instead of betting on one company or segment, you buy the whole damn thing and call it a day. Consistency- The Spurs are consistently well rounded and have mastered finding talented role players to fit their system. Index funds are similar in that they are well rounded (diversified), simple to understand and based on consistent execution of the basics. It may not make SportsCenter but it gets W’s. Long term thinking- The Spurs focus less on flash and more on building a dynasty. Despite the pushback, they even rest their players during critical games to withstand the rigor of a long season. Similarly, having index funds at the center of your investing strategy ensures you have your eyes on the long-term prize not just the task at hand. This approach ensures, you’re less concerned with the daily individual dips and falls and more interested in the rising tide of the market as a whole. Efficiency– The Spurs have dominated on both sides of the floor. Index funds are the same in the sense that they have consistently outperformed the majority of active managed funds while costing considerably less. That performance on both sides of the equation translates to real returns over time.
Bottom line Let the other players get the fancy jets, wear the sparkly shirts, live in the A markets and audition to be the next big bust. Focus on your agenda; your style of play and let the game (that moolah) come to you. In other words, stop guessing and start investing.