Talent Distribution

Skip to main content

In 2013, Brian Scalabrine, a recently retired 11-year NBA player, had enough.<br>Scalabrine was sick and tired of hearing average Joes say they could beat him one-on-one on the court. The armchair professionals insisted that Scalabrine, who averaged 3.1 points per game over his career, a poor player by NBA standards, would be an easy challenge.<br>Scalabrine wanted to shut them up. Scalabrine took on four of Boston’s best amateur ballers, dubbed it the “Scallenge” and recorded it for all to see. Some had Division - 1 college experience. All had supreme confidence they would win.<br>Here is how it went.<br>The Vanilla Godzilla lambasted every single one. The D-1 guy who played at Syracuse lost to Scalabrine 11-3. The next two average Joes didn’t even score a point on Scalabrine. And the last competitor couldn’t score more than 3 points, too. Once the former NBA player figured out the competition, they didn’t have a chance. In total, Scalabrine scored 44 points to their 6.<br>For safe measure, Scalabrine finished by facing off against the three radio hosts who were running the “Scallenge”. Despite being outnumbered 3-to-1, Scalabrine scorched them 11-1.<br>Why is this story important?<br>At the end, Brian Scalabrine said something prophetic, “I’m way closer to LeBron James than you are to me.”<br>Let that sink in for a moment.<br>We all are trying to succeed at investing. We enjoy the process. We enjoy the challenge, but we all want above average returns. Otherwise, what’s the point? Just invest in index funds.<br>All of us, I believe, deep down in the lowest depths of our ego, hope that we can reach the peak, the apex of our field. That desire is to rub shoulders with the best, compete at the highest level AND be considered the best, too.<br>Let’s face it though. We can’t all be a freak of nature. That just isn’t statistically possible.<br>There’s a much greater chance, however, we are the average Joes thinking, ignorantly, that we can keep up with the bottom of the barrel of the top 1%, the Brian Scalabrine’s of investing.<br>The “White Mamba”, as Scalabrine has been nicknamed, was far from the best NBA player. But to play in the NBA for any length of time, one is in an elite group of the best basketball players in the world. The focus of the viewer’s attention fixates on the elite of the elites. Don’t forget: they’re all phenomenal vs the rest of us.<br>Here is the reality. Investors form themselves into the bell curve we see in all areas of human talent, like above. At the left are the bad ones. This group makes up 50% of the human population. This group lacks the skill, genetics, knowledge and “fitness” to do the most basic of task at a manageable, let alone great level over a long period.<br>Next to them, is a group which is slightly smaller but still large, roughly 40%. These are the mildly able investors. They might survive for a short time, or might be lucky enough to look good during boom times, but when the tide turns, they’re history. These are no more than one-hit wonders.<br>The next level is much smaller. These are the good investors, operators, artists, basketball players and so on. When I say good, they consistently smoke weaker competition and attain above average results. They usually operate in small niches. Generally, these are the people who’ve reached the top of their field with mountains and mountains of work, intelligence and fanaticism. Brian Scalabrine would be at the top of this pack.<br>Above them and us all, are the Disney’s, the Walton’s, the Buffett’s, the Malone’s, the Mozart’s, the Jordan’s, the Jackson’s, the Jon Jones’s and the Rockefeller’s. These are the freaks of nature. Divine accidents, gifted at birth and through nurture with talents beyond us mere mortals. Everything comes at least 4 times quicker to them so each stroke of effort multiplies exponentially allowing them to dance circles around everyone while we all bash our heads into the wall wondering enviously, “How on earth do they do that?”<br>So be honest with yourself first. Where do you personally fall on the bell curve?<br>It’s a bull market and heady part of a cycle, so more people think they can tussle with the Brian Scalabrine’s of investing by themselves and win. But that’s silly. Those individuals are much, much closer to the freaks of nature than most of us are to them.<br>Our estimation of our own abilities is probably higher than it actually is. It’s like asking a group of random people who are great drivers. Every hand goes up. Build a margin of safety in. Deduct plenty of points from your initial knee jerk estimation.<br>As an investor, I would put myself in the middle of the mildly able. I have worked years to go from barely able to average. But I am honest about it.<br>The path from barely able to phenomenal is close to lottery odds. And moving from barely able to the level of the freak of nature on your own is impossible. It will not happen, full stop.<br>Thankfully, for those of us who are mortal, being part of a group...