Horseshoes & Hand Grenades

A European man visited Grafton County, New Hampshire, last week.

He visited a place that many of history's most creative thinkers had spent formative years: Fred Rogers, Robert Frost, and Theodor Geisel ("Dr. Seuss"), to name a few.

He was an academic guest of honor (despite that he stopped going to school at age 16).

Data should never be naked, and context is clothing.

• If you are a student with a 54%, you are in academic trouble.
  

• If you are a basketball player shooting free throws, 54% is unacceptable.
  

• You cannot show up on time to work...only 54% of the time.

But this man didn't go to college, doesn't play basketball, and is retired.

And 54% led him to this esteemed podium.

The man is Roger Federer, and he was Dartmouth College's 2024 Commencement speaker.

When the late David Foster Wallace (himself adored for this 2006 Commencement speech) wrote about Roger almost 20 years ago, he described Roger's art as a cathedral.

Two decades later, Roger told the Dartmouth graduates this last week:

He played 1,526 matches.

He won about 80% of them.

...but he only won 54% of all the points played.

54% is often terrible. But in elite tennis, it's worth 8 Wimbledons.

• At least 4 points in a game.

• At least 6 games in a set.

• At least 3 sets in a match.

There ends up being quite a lot of (data) points in 1,526 matches, where just consistently winning 54 out of 100 does the trick.

Tennis is a game of inches: the technical difference between a shot being "in" and "out" is, technically, the smallest unit possible.

As Jackie Robinson said, and elite tennis hitting is akin to elite baseball hitting:

Close doesn't count except in horseshoes and hand grenades.

It needs to be perfect. But perfection in tennis is vastly different than other perfections. Near-perfection in matches is actually just about 54% of all points. And investing is like tennis in one sense, and not like tennis in another.

It's not like tennis because there is immense randomness. Especially over short periods — you can have great investment outcomes from poor decision-making, and terrible investment outcomes from high quality decision-making. Random shit happens. There is not a great feedback loop if you don't wait a long time for randomness to mostly zero itself out (some good, some bad).

High quality decision-making always matters, but it's more significant the longer you can let it play out.

And that is like tennis.

You need more data to be confident that 54/100 is accurate, and you need more time to know that 54/100 is elite based on the outputs.

If you play a game of inches, for many games, and many sets, and many matches, over many years — 54% of points will get you 100% of the way there.

What you can do as an investor is control your inputs, embrace uncertainty and randomness as elements and not hurdles, and hand over the reins to time. Roger almost always played beautifully, yet only won 54% of points. Great investors won't always love the way it looks, but if the inputs are right, one need to just keep delivering high quality inputs.

Investing has no helpful, quick feedback loop — it's not harder than elite tennis, per se, but it's harder to know if you're doing it the right way.

If you are assessing your short-term investment returns frequently (like checking your account too often), it will feel like you are always playing quick points. Matches are indeed a series of points, but you don't need to win every single point to be truly excellent.

If you are defining a successful investment experience as never being frustrated, you will not last.

Instead — if your process has thoughtful inputs, and you can accept disappointing periods as inevitable parts of a well-designed strategy amidst uncertainty, then you will avoid thinking you need to change your grip every time your portfolio frustrates you.

End.