Peter L. Bernstein, the editor of Journal of Portfolio Management and the famous writer of two popular finance books — Capital Ideas: The Improbable Origins of Modern Wall Street and Against the Gods: The Remarkable Story of Risks. In this article, Bernstein has taken on has taken Stephen Gould’s theses in Full House: The Spread of Excellence from Plato to Darwin about the 0.400 hits in baseball , and correlates it to the business and portfolio management. In his book, Gould talks about the the disappearance of the .400 hitter. What happened? Do batters have less skill than they used to have? Gould rejects that possibility as highly improbable, especially in a society that cultivates talent with as much zeal as U.S. society does. Bernstein said that “Portfolio managers performance data reveal patterns that are very similar to what actually happens in the baseball world”.
This article demonstrates that potential .400 hitters in the stock market are falling short of their goal because growing numbers of today’s investors are sufficiently educated, sophisticated, and informed to block their way, just as batters capable of achieving a .400 average have fallen short of that goal since the old days because defending teams have developed sufficient skill to block their way.
Where, Oh Where Are the .400 Hitters of Yesteryear? by Peter L. Bernstein