If you like baseball, then the book Odd Man Out written by Matt McCarthy, Viking, NY, 2009 will appeal to you. The book is about life in the minor leagues, in this case, the Anaheim Angels farm teams. The structure of baseball is the very best players play in the Major Leagues and compete for the World Series Trophy. Below the major leagues are minor leagues or players that have potential with some seasoning to move up to the major leagues. Players are drafted from high school to college and get paid to play baseball, if they can survive the toll of the minors, they can survive anything. Baseball is often called a game of statistics and over the years (since the publication of Moneyball) there has been a change in which statistic is the most important in trying to predict a future major league player. The book is about the human element which remains the most important variable – mental attitude and heart which are harder to quantify.
If you switch to thinking about the stock market, the minor leagues are those companies which could break out and become profitable and grow their base into regional, national and international companies. Which statistics are the best ones to use to predict winners and those than you need to exit?
Linking to dividend providing companies, these companies are at the major league level and the most important statistic is the dividend and is it sustainable? if the answer is yes, and in many companies it is; whether the stock price goes up and down is a secondary issue. With a continuing dividend, the price will go up in the long run. While the predicting of players who will go onto the major leagues from the minors is an very interesting and often where the greatest capital gains can be found, it also has the most risk. A classic case is from the movie Bull Durham lead character’s greatest moment was going to the show or the big leagues for one day. the rest of his long career was spent in the minors. If you wish to lower your risk level, ensure most of your investment dollars are in dividend companies where you can always find companies with capital gains potential.
There are more questions than answers, till the next time – to raising questions.
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