10 Ways to Improve Your Investment Process – #8. Pay Attention to the Details

The eighth idea to improve your investment process is to pay attention to the details.

The book The Extra 2% tells the story of how former Goldman Sachs colleagues Staurt Sternberg and Matthew Silverman took over operations of the Tampa Bay Rays baseball team in 2005. Prior to that, the team had been a disaster and a perennial bottom feeder.

The turnaround was dramatic. In 2008, the Rays became the first team in modern Major League history to hold the best record through Memorial Day after having the worst record the year before. They went on that year to play in the World Series where they lost to the Phillies.

How did they do it?

They relentlessly sought to improve all aspects of their baseball process, no matter how small – from parking, to concessions, to how they looked for new players. To identify undervalued ball players, they carefully analyzed statistical data – a method known as sabermetrics – to rebuild the team around lesser-known young stars.

The lesson here is fairly obvious, yet nonetheless powerful: to be successful, you need to look at all aspects of your process and look for small incremental ways to make them better. If you plug away at it, these little things – the Extra 2% – can make a huge difference.

In an earlier post on improving your investment process, I mentioned how casinos achieve a good outcome by focusing on their process, namely only playing games where the mathematical expectancy is in their favor. But they don’t stop there. They maniacally focus on little things to keep folks playing, knowing the longer people play, the more the house earns: free drinks, comps, table limits, shoes vs. single decks, “help” from the dealer, minimum bet sizes, classes on how to play, an exciting ambiance, comfortable seats, attractive servers, cameras to prevent cheating, and chips instead of cash to foster mental accounting. Nothing is overlooked.

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