Mar

28

The late baseball great studied hitting as closely as a stock strategist studies markets. In fact, Williams' hitting rules can easily make you a better investor.
By Victor Niederhoffer and Laurel Kenner

"Get a good ball to hit."
– Rogers Hornsby to Ted Williams, on the single most important thing for a hitter.

A person, a field, a book. Sometimes they come together with such genius that you wish to carry the lessons around and apply them to everything you do. Such is the case with Ted Williams’ "The Science of Hitting," widely considered the definitive book on the subject. With the baseball season soon starting, the market reeling and investors searching for a rudder, it seems particularly appropriate to learn from the book’s timeless lessons for all fields. But we’ll go even further. We’ll show how to use this method to make a profit by trading IBM (IBM, news, msgs) and similar biggies on Thursdays, when the count is right.

Williams was the last batter to achieve the magic .400 average in a full season — 1941, when he hit .406. (He also had .400 averages in 1952 and 1953, when his seasons were cut dramatically short because of Korean War service.) He is considered one of the three best hitters ever, with Babe Ruth and Rogers Hornsby. “I had to be doing something right,” he said. “And for my money the principal something was being selective.”

His selectivity was unique and inspiring. He divided the 4.6-square-foot batter’s box into 77 zones, and assigned each a hitting percentage. The sweet spot was high over the middle of the plate, where the batting average hit .400.

Rule No. 1: Wait for your pitch

Warren Buffett cited "The Science of Hitting" in his 1998 annual report in a discussion of his favorite subject: How the market doesn’t look good to him. (His most recent annual report, published Saturday, repeats the sentiment.) Buffett said he, like Williams, follows Rule 1 and waits for the great pitches — the great companies — and holds his fire until they arise.

After Rule 1, we will expand the list of hitting rules to 11, drawing from the lessons in Williams’ book.

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