Thursday, June 24, 2010
I am a soccer fan, therefore I am aglow with pride over the USA's victory over Algeria to win their group phase in the World Cup in South Africa. My love for "football" came because both of my sons gave up playing my sports (baseball and basketball) when they were very young to concentrate on soccer. Since I love both of my sons, perhaps it was only natural that I would come to love the game they loved, even though for many years I did not understand the difference between a "corner kick" and a "free kick." My understanding of the game bloomed as a result of my younger son, Nick, being recruited by legendary Indiana University coach, Jerry Yeagley. Our family started driving to Bloomington, Indiana, every chance we got to watch Yeagley's Indiana team demolish their opponents. Yeagley would ultimately win 6 national championships during his 30+ years as coach of the Hoosiers. Nick ultimately matriculated to IU to play for coach Yeagley. He learned after a few days of practice that he was to be red-shirted, which meant that he would not appear in any games in his freshman year. That was a disappointment to Nick and our family but there was a bit of sugar with the lemon. Every Wednesday night at practice, there was a full scrimmage between the first team and the second team, which consisted of many red-shirt players. I began a weekly pilgrimage to Armstrong Stadium in Bloomington to watch these highly competitive, entertaining scrimmages and a chance to watch Nick show his stuff. Many other parents also came to these matches because the team was large and the playing time small. I also began making the two hour drive each week because being in the investment business, I'm always interested in winners: Who they are? How did they get that way? I was delighted that Coach Yeagley was always very open in his explanations of why he believed his Hoosiers had been such consistent winners. Among the basics he mentioned were that speed trumped skill and that conditioning trumped speed. Furthermore defense trumped offense, and that defense was a function of conditioning and teamwork. He surprised me one day when he said that when he was recruiting a young man, his first visit was to his guidance counselor. He wanted to know what kind of person the young man was away from soccer. Did he care about grades or his teachers and fellow students. I asked coach why this was so important. He said that in the IU program defense was key and defense took speed and conditioning, but defense also was a function of teamwork. A team might have one big-time scorer, but there was no such thing as a solo big-time defender. Defense was completely a function of teamwork and organization. If the young man was a prima dona or a head case, he would never be able to endure the tough conditioning and teamwork drills that were at the core of IU's program. Coach Yeagley told me one evening that he had sought out IU basketball coach, Bobby Knight, to learn about his coaching philosophy. Not surprisingly coach Yeagley said that he had adapted some of coach Knights defensive theories into his own approach to soccer. Coach Yeagley said skill was necessary for winning, but that a team could get by on far less skill than most coaches thought. Three or four highly skilled players could produce scoring, but it took eleven men to defend properly. I remember one of his great teams had three back line defenders who were not recruited by any colleges to play soccer. They had all been outstanding Indiana high school basketball players but were only above average soccer players when they came to IU. Coach reasoned that if a kid was fast enough and knew the principles of playing man to man defense in basketball that he could teach him to play a smothering defense in soccer. Let me bring this story around to investing. I don't' think I ever thanked Coach Yeagley for something he taught me about investing. Actually it was something he said about winning soccer that suddenly rang true about winning investing. He said there are four periods of a game when most scoring occurs: in the first five minutes of the first and second halves and in the last five minutes of the first and second halves. Scoring often comes during the first five minutes of each half because one or both teams is not organized -- a failure of teamwork. Scoring often comes at the end of the first and second halves because of fatigue. The average midfield soccer player runs nearly five miles during a match. Since players are seldom substituted in soccer, at the ends of both halves, fatigue is burning in the lungs and legs of every man on the field. Not only that, but fatigue also drains the will to win. He said IU had a history of scoring during these five minutes periods, not so much because of what they did, but because of what the other teams did not do. He said that it was his intention that no team be in better condition than IU, but just in case they were, that the scrimmage on Wednesday night showed each starter just how many guys were after his job and just how close they were. I took away from those conversations with Coach Yeagley a realization that I have repeated ad nauseum. At Donaldson Capital Management we own companies that can last. Our companies possess the financial strength and corporate strategies that can last through recessions, periods of inflation, stagflation, booms, busts, and even from time to time inept corporate management. We attempt to own companies that are financially fit, good team players, good citizens, and know how to win, fairly and squarely. Teams that never give up and always believe that time is on their side. Interestingly, the USA's soccer team has scored twice as many goals in the last five minutes of their matches as any other team in the tournament over the last four years. Somewhere in Bloomington Indiana Coach Jerry Yeagley is surely smiling. Go USA, beat Ghana.