As reported in The Los Angeles Times this week, Alex Permann, a 24-year-old optometry student at the University of Missouri-St. Louis, was selected for one of those popular shooting contests at this past Sunday’s Missouri Valley Conference tournament title game between Creighton and Wichita State. “All” he had to do was make a lay-up, a free throw, a three-pointer and a half-court shot in 24 seconds and he would win $50,000. Permann made the lay-up and, on his second attempt, he hit the free throw. He then ran out to half-court and nailed a shot from there. $50,000! Permann went wild, jumping around the court, arms raised in triumph. The crowd went wild too.
“When I hit that shot,” Permann said later, “I was thinking about 50 grand.” Watch it below.
One problem. He forgot to take the three-pointer. No $50,000 for Alex.
“I guess I don’t listen too good,” Permann said (I bet his school is pleased he’s not an English major). By the time he realized his mistake, he had time to rush off a couple of 3-point attempts, but both missed. He got things almost right — including the half-court shot, which is the hardest part — but failed to achieve his primary goal.
Tournament organizers decided to be generous though, and gave Permann tickets for life to the Missouri Valley Conference tournament and a three-day hotel stay for next year’s event. But still no $50,000.
In the investment world, getting things almost right is usually a very good result. That’s because investing is a probabilistic endeavor. Nobody gets things perfect. Everybody makes a lot of mistakes. The idea is to minimize the mistakes — in the words of Charley Ellis, the idea is to win the loser’s game. But it’s also crucial that we get things right about getting them almost right.
What I mean is that if we neglect or forget the overall context and purpose of what we’re doing, like Permann, the outcome can be net lousy even if we get the investment part very close to exactly right. For example, we can do an excellent job in asset selection and asset allocation, but if we neglect asset location (this piece on the subject by my friend Michael Kitces is outstanding), we can make a real mess of things.
Nobody’s perfect in the investment world — not even close. There are too many variables. But if we manage what we can control well (asset allocation, fees, tax efficiency, etc.) and thus get almost right, right, we don’t have to end up like Alex Permann, having accomplished a lot but not gotten what we were really after.