Can a record-making National Basketball Association team offer any lessons in investing? On the surface, the two disciplines have little in common. But at a broader level, success in sports, as in investing, does stem from some basic traits — discipline, strategy, skill and above all, luck.
The Spurs legacy The San Antonio Spurs was in July crowned the NBA champion for the fifth time in the last 15 years. Winning the Larry O’ Brien championship trophy after their loss to the star-studded Miami Heat in the 2013 finals (as retribution, they beat the Heat to win the title in 2014) has rekindled interest in the Spur “way”.
If this is not impressive, the Spurs have achieved the highest winning percentage in professional sports across any sport during this period. Consistency of winning is unmatched by their peers or other clubs. Their winning percentage is only matched by the mighty West Indies in the 1980s and the Australian cricket team, led by Steve Waugh and Ricky Ponting in the 2000s — all three have had a winning percentage of over 70 per cent! But for the Spurs, this has been achieved for a period of 15 years, a longevity rivalled by neither the West Indies nor the Australian cricket teams.
The Spurs legacy is not just built on their winning percentage or the longevity of their coach or their core big three. It comes from a team philosophy of eschewing showmanship for solid, consistent performance. In sports, as in business, there is an unhealthy focus on superstars, on results over process. In Spurs “land”, the focus is to build a team which is effective, and not to rely on its superstars to dig them out of the hole.
Rarely, Spurs beat their opponents based on last-second heroics. Generally, their approach is systematic and team-based. A system built on constant flow on the offensive end — at least three passes before attempting a shot and rigid man-to-man marking on the defensive end — makes Spurs an exhausting team to face.
Only the fittest can match them. To sustain this momentum, the team follows a strict time management regime, ensuring no individual heroics and keeping “legs fresh” during the long season. These are lessons for other teams to emulate, but difficult to practice, a la Warren Buffett’s investment style. The Spurs haven’t built a “cheap” team.
What they have constructed is a roster of players which is competitive year after year and yet has avoided paying the penalty “luxury tax” for 14 out of the last 15 years. The San Antonio Spurs have thus built a legacy based on hard work and discipline, not simply following the most popular trends, focusing on team over individual, and through a favourable roll of dice.
The philosophy For any successful practitioner of investment, these should be the bedrock on which any investment style should be based. Following Coach Pop may not lead to identifying tomorrow’s winners. But it may help an investor build a model which can be used to identify these winners.
The writer is Group President and Head of Equity at UTI Mutual Fund