Batting Average vs Slugging Percentage

I came across an interesting tweet this morning that really resonated with me regarding Portfolio ROI:…

The tweet references an interesting paper written by Morgan Stanley about portfolio return and how it is affected way more by slugging percentage (basically how much you profit on your good investments) than it is by batting average (basically what percentage of stocks you bought that are profitable at any time). This is consistent in my mind with how most people on this board invest as well as with Tom and David Gardner’s Mantra on how a few big winners will make up most of your stock returns over the long haul.

Perhaps it is the baseball analogy that piqued my interest and reinforced my evolving investment style as I move more towards a more concentrated portfolio like many here follow. My returns have historically been very good but pale in comparison to Saul and many of you, so my brain appreciated reinforcing a great lesson in a slightly different way. My slugging percentage has certainly improved dramatically over the past few years thanks to ZM, MDB, and a handful of other big winners.

I don’t intend this to start a long thread as some of the topic borders on portfolio management which isn’t allowed here. If this is interesting to you please follow the link and read the Morgan Stanley paper referenced by the tweet. Feel free to reply via email if you want to continue the discussion.



Batting Average vs Slugging Percentage is consistent with the Pareto 80/20 distribution. 20% of your stocks will produce 80% of your returns. Saul’s secret sauce is to get rid of the non-productive long tail of the distribution. Your tenth best idea cannot be as good as your top idea, get rid of it.

Denny Schlesinger


Mike Trout = Zoom

End of Discussion.

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To date, I have lost money on more of my issues than I have profited. I have profited more on my profitable issues than the S&P500 has gained in the same time period (8 years now). My portfolio is full of alpha as a result.

This is a Foolish tenet.