In 2002, Oakland A’s General Manager Billy Bean (played by Brad Pitt in the 2011 film Moneyball) is trying to build baseball team on a shoestring budget. He just lost three of his best players to large contracts with other teams.
While in Cleveland, he has a run in with Jonah Hill’s character (based on Paul DePodesta). Hill’s character vetoes a trade proposal. When later confronted by Bean, Hill’s character is so afraid of being seen as a crackpot he has them hide in the parking garage to talk. In one of those goosebump movie moment, Hill’s character reveals his belief that there is a fundamental flaw in how baseball teams are managed.
See the clip here: https://www.youtube.com/watch?v=8DDMHwqIn3s
“Teams think in terms of buying players,” he tells Bean. “But their goal should be to buy wins, and to buy wins you need to buy runs.” He concludes his rant with, “baseball has an imperfect understanding of where runs come from.”
When families are saving for retirement, they can fall into same trap as baseball executives had. We can think in terms of buying assets.
Instead, we should start with our purpose. Then have a crystal-clear understanding of each step on how to achieve our goal. And then we can have a plan that will incorporate investing as a way to reach our purpose.
So why are we saving? The first answer is different for everyone. It’s your specific life goals.
The second answer is the same for most people. We are trying to meet future spending needs out of our accumulated assets for an unknown period of time so we can do whatever our first answer is.
Later in Moneyball, we find out that the secret to generating runs is getting on base, not necessarily hitting home runs. More home runs could come at the cost of more strike outs. Better to have a player that walks a lot because he avoids outs and gets on base.
Bean’s A’s and the Yankees both won 103 games that year. The A’s spent $385,000 per win and the Yankee’s spent $1.2 million per win.
Focusing on the purpose of saving and investing, generating income in the future to meet our goals, can help us be more like Billy Bean’s A’s.
One way to get a clear understanding of purpose and a game plan to execute on it is to become an Elite client through on-going, fee-based financial planning. Schedule a Review today.
Andrew Eppes, RICP®
Andrew Eppes is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. www.SIPC.org. Nexus Advisors, LLC is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. 14241 Dallas Parkway Suite 1200 Dallas, TX 75254 972-348-6300. The idea of retirement means different things to different people. CRN202502-1630160