The Better Letter: Lessons Learned

Neurath, 2020 lessons, and baseball

Philosopher Otto Neurath’s boat analogy (made famous in Word and Object) compares the holistic nature of language and thus scientific verification with the construction of a boat that is already at sea.

“We are like sailors who on the open sea must reconstruct their ship but are never able to start afresh from the bottom. Where a beam is taken away a new one must at once be put there, and for this the rest of the ship is used as support. In this way, by using the old beams and driftwood the ship can be shaped entirely anew, but only by gradual reconstruction.”

This powerful metaphor applies in most areas of life. 

The world in which we live is profoundly complex and is much more difficult for us to navigate than we usually think or assume, no matter how good our boat. As Daniel Kahneman put it, “We systematically underestimate the amount of uncertainty to which we’re exposed, and we are wired to underestimate the amount of uncertainty to which we are exposed.” Accordingly, “we create an illusion of the world that is much more orderly than it actually is.”

Rebuilding a boat while at sea is really hard.

Our ability to forecast the future, much less control the future, is extremely limited and is far more limited than we want to believe (much more on this next week). We simply misapprehend (or ignore) the data. Instead, we concoct stories — often wonderful stories — to provide an interpretive framework for our forecasts, expectations, desires, and decisions. These stories are much more compelling than the actual data, which is discouraging at best. Stories sell better.

We are in a season of stories. In the investment world, these stories will come in the form of year-end letters (often designed to justify performance that wasn’t quite up-to-snuff), projections, forecasts, “best of” lists, and expectations. The data (such as it is) will be handled with great care — comparisons to measures that can be beaten (or nearly so), for example — with thoughtfully wrought stories as explanation (such as “we were right, but early”). 

Kahneman, again: “We can expect people to be way overconfident, because they have that ability to tell good stories, and because the quality of the stories is what determines their confidence. The extent of that overconfidence is actually quite remarkable.”

Remarkable indeed.

Those of us who are honest with ourselves and with others will be left trying to muddle through somehow, living on Neurath’s boat — making adjustments on the fly while trying to keep the whole thing afloat, keeping our promises and expectations grounded in the limiting reality of the data. It isn’t a great recipe for sales success. But it helps me sleep at night. It’s the right thing to do, too.

We would all like progress and thus real success to come more quickly, more cheaply, and more comprehensively than reality allows. And, if success comes, we anxiously tell ourselves it’s because we’re really good and not because we’re really lucky … even if and as our failures are always somebody else’s fault. 

We are tempted and too often swayed by the shiny new object — the next “silver bullet” — that will make things right. Fast. Sadly, life doesn’t seem to work that way very often, no matter what our stories say.

Here’s to a New Year of muddling through but doing so with integrity, one beam at a time. We’ve gotten through a most difficult 2020. Let’s start afresh. Big challenges remain, of course, but – like 2020 – they can be navigated.

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Lessons Learned

My San Diego Padres have never won a World Series in 52 seasons of (kinda) trying. We are 628 games under .500 all-time. Meanwhile, our division-rival Los Angeles Dodgers, just a couple of hours up the I-5 (traffic permitting), have coasted to eight straight division titles and are the reigning World Series champions, winning 175 more games than the Pads over those eight years. 

It hasn’t been easy being a Padres fan. 

Hope always springs eternal for every baseball fan, of course, especially while waiting for pitchers and catchers to report. Today, however, that hope seems much more realistic. After signing free agents Eric Hosmer and Manny Machado to lucrative contracts in successive years, the 2020 Padres finally fielded a competitive lineup, highlighted by the most exciting player in baseball, (the still only) 21-year-old Fernando Tatis, Jr.

A winning record for the first time in a decade was assured and a trip to the postseason for the first time since 2006 seemed likely when, over the course of three days leading up to the trade deadline, general manager A.J. Preller traded or acquired 26 players, including Mike Clevinger, Trevor Rosenthal, and Austin Nola, with most of the newbies under team control well into the future.

My Pads finished the regular season with the third-best record in baseball (even though the Dodgers took the division), winning more than everyone but the hated boys in blue and the Tampa Bay Rays, who would meet in the 2020 World Series. We even won a post-season series for the first time since reaching the World Series in 1998 before falling to the rival Dodgers after being decimated by injuries.

With Clevinger injured and 2020 Cy Young candidate Dinelson Lamet’s health still in question, the Padres began the current offseason seeking to improve the pitching staff. Earlier this week, Preller added two more Cy Young caliber arms to an already solid young roster, and neither of them is a one-season rental. We’ll have Blake Snell and Yu Darvish through 2023, at least. The Padres are the first team ever to acquire multiple pitchers of such quality in the same offseason — and it all happened in the span of about 24 hours.* MacKenzie Gore, generally regarded as the best pitching prospect in the game, has not even been given his Major League debut yet. 

Preller also signed free agent Korean infielder Ha-seong Kim this week, making the Pads merely a rounding error away from the Dodgers in projected 2021 WAR, and ahead of everybody else, according to FanGraphs, with the best pitching staff in baseball.

Games are won on the field and not via projection or in the off-season, of course, but this is remarkable news for Padres fans, especially because we are not anything like a large market. The Padres are finally “swaggy.”

Since the global pandemic struck during the 2020’s Spring Training, most teams around the major leagues have been exceedingly cautious, largely on account of the ongoing uncertainty over the pandemic and the billions of dollars in losses it (perhaps) imparted upon MLB together with the potential upcoming labor strife.

The Padres, on the other hand, have gone against the current, both at the trade deadline in 2020, when they were aggressive in upgrading the team, and during this offseason (which is far from over), when they came into the winter still underdogs to the Dodgers. Preller clearly sees an opportunity where most teams are taking a step back. He certainly did with the Cubs, who received surprisingly little in exchange for Darvish but were mainly looking to dump payroll.

Twenty-nine Major League Baseball teams had the opportunity to acquire two of the best pitchers in the world for not much more than a few lottery tickets, albeit talented ones. Only the San Diego Padres went for it. Preller, already the most aggressive GM in baseball and loaded with prospects – valued more highly now than ever – saw blood in the streets and started trading.

Preller’s approach over this past year has been a classic application of Warren Buffett’s famous advice to be fearful when others are greedy and greedy when others are fearful. That’s a solid maxim anytime, if difficult to execute successfully. However, the Padres’ actions also have a particularly 2020 spin: The necessary reserves and balance sheet strength were in place when opportunity knocked during a very scary and difficult time. During this pandemic, those people and businesses which didn’t have strong balance sheets and didn’t (or couldn’t) live within their means had far more difficulty than those who did. Cash management and financial strength matter.

Here are some other particularly 2020 lessons that have stood out to me this year.

Our idea of normal is fragile, life on this planet is fragile, and you can't count on things always staying the same.

We are lousy forecasters (lots more on that next week). During March, who expected 2020 to turn out to be a terrific year for stock and bond markets?

Optimization can be dangerous. For example, an optimized supply chain in China was a major problem in 2020. A less optimized but diversified and thus redundant supply chain, including domestic suppliers, was a much better option.

Cyber-security and having multiple ways to transact business in an emergency setting seem much more important today. Everyone should have a careful plan for how to secure their disaster recovery and run their business continuity plans.

More efficient work (e.g., more Zoom/less travel) is here to stay, but we shouldn’t ignore the value of personal connection.

Flexibility is crucial. Individuals and businesses that could quickly pivot if and as needed had a big advantage in 2020. 

We consistently underestimate our resilience, our ability to innovate, and our adaptability (to paraphrase the Apostle Paul). Scientists created multiple effective vaccines for COVID-19 in a matter of months. That’s amazing! 

Jesus said, “those who lose their life for my sake will find it.” Michelangelo believed that his David was already within the marble he started with. He merely (which is not to say that it was anything like easy) had to chip away that which was not David. And in his book, The Subtle Art of Not Giving a F*ck, Mark Manson argued that it’s only by losing something that you can determine how much you value it. When things we value are unavailable – as in 2020 – we’re given the opportunity to see what we miss and what we don’t. And we don’t miss as much as we expect.

Seemingly mundane or routine decisions are more important than we thought. There’s a famous study that found that judges give harsher sentences if they hadn’t eaten and were hungry and more lenient ones after lunch. Take care of yourself. Eat right. Get enough sleep. Exercise. (Physician, heal thyself!).

Totally bizarre and unlikely things happen far more often than we think. As noted, who would have believed during March’s stomach-churning drawdown that 2020 would turn out to be a fantastic year for both stocks and bonds? And who would have believed that Cody Bellinger would hit a game-winning home run in game seven of the NLCS and suffer a shoulder injury requiring off-season surgery celebrating it?

Finally, this: If the S&P 500 can rise 16 percent in 2020 to close the year at an all-time high despite a global pandemic, record unemployment, recession, economic shutdowns, negative oil prices, and a historically contentious and polarizing election, you might reconsider trying to time the market.


According to the rankings at both FanGraphs and Baseball America, the Padres dramatically improved their roster while keeping six of their top seven prospects, losing only pitcher Luis Patiño (to the Rays in the Snell trade) from their top group. And, while the Padres gave up some talented but very young and unproven prospects and a mid-rotation starter to get Darvish, the Cubs – who won their division last year! – just gave up. The projected Fangraphs WAR for the Cubs rotation in 2021 is now dead last in baseball. 

Totally Worth It

There is something special about a handwritten letter.

This is the smartest thing I read last week. The stupidest. The most insightful. The evilest. The nicest. The saddest. The loveliest. The bravest. The funniest. The coolest. The most dangerous. The craziest. The sweetest. The most practical. The most beautiful. The most literary. RIP, “Mary Ann.” My childhood hometown had a white Christmas (see below).


I write these lines as 2020 is (finally!) coming to a close and 2021 about to dawn. So, I will close this final TBL for the year with a true benediction and blessing.

May each of you, your families, and your loved ones have a blessed and happy new year.

Contact me via rpseawright [at] gmail [dot] com or on Twitter (@rpseawright). Don’t forget to subscribe and share.

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Issue 45 (January 1, 2021)