Investing in Teams > Investing Alone
One person’s money, another person’s imagination, and another person’s connections, all add up to more than the sum of their parts in the business world. The immense personal talent and imagination that Walt brought to building Disney would have counted for little without “nine old men” appeasing Wall Street gaffers behind the scenes. Jobs and Woz, Page and Brin, and the Wright brothers, also made powerful combos.
Even in stock markets, Warren Buffett, the most revered investor of all time, would be a few billion dollars poorer without right-hand man Munger by his side. Yet, according to studies by Morningstar, a quarter of money moved by professional funds today is pushed through by singletons. In the non-professional space? We’re even bigger loners!
Sure, super-investing solo hands like Peter Lynch, Bruce Greenwald, and Shelby Cullom-Davis got minted prior to modern times doing isolated number work. But that was prior to modern times. Michael Mauboussin of Blue Mountain Capital Management believes we’re now leaving dollar bills on the table by only looking inwards for alpha.
In a hot take on diversification, he says we need to form teams, and “the best team size is three!” An even number of team members gets you split decisions. A bigger number of team members gets folks lobbying for sides. Three is the magic number. Me, myself, and I, then? Not quite. “Differences in personality is a good thing, with problem-solving aided by unique educations and experiences.” Cue the co-opetition!