Peyton Manning, Buffett and Munger

The 2011 NFL Most Valuable Player was without a doubt Peyton Manning.  Due to a quirk in the NFL rules, Manning did not win the MVP award that year because he did not take a single snap for the Indianapolis Colts.  Details….

If your hometown team was the Colts in 2011, what odds would you have taken that the Colts would not win the Superbowl that year?

There are 32 NFL teams. Knowing one team extremely well means you know 3% of the NFL.

Buffett taught me to know my home team well.  (3% of the Russell 3000 is about 100 companies)

Munger taught me that the man with the hammer only sees nails and that the one-legged man will always lose an ass-kicking contest.

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Returns for Great vs. Bad Businesses

Munger and The Cattle Rancher

Munger’s ability to find great businesses is directly related to his ability to consistently discard bad businesses. He is excellent at inverting, and discarding the bad businesses as quickly as possible.

The Abominable No-Man and Bad Management

Some investors think a business is good, but know that management is bad.  These investors justify the investment based on the idea that the great price of the business is worth the bad management. This is akin to marrying a supermodel who is going to yell at you all day.  Whatever pleasure your eyes may derive from the marriage, your ears will endure a greater amount of pain in the long run. The pocketbooks of those partnering with bad management are likely to see a similar 50%+ decline in their net worth.

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