Hall of Fame Pitcher Nolan Ryan Would Be A Great Microcap Investor [GeoWire Weekly 96]

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Nolan Ryan, a hall of fame baseball pitcher drafted by the New York Mets in 1965, was a gunslinger with a fastball “unofficially” clocked at 108.1 miles per hour. He was one of the best pitchers to play the game. He played in the major league for 27 years, across 4 teams: The New York Mets, California Angels, Houston Astros and Texas Rangers.

Ryan retired in 1993 at the age of 46 with a record 5714 strikeouts – 383 of those strikeouts came in 1973, breaking the single season strikeout record of 382 by his idol, Sandy Koufax, a lefty who played for the Los Angeles Dodgers between 1955 and 1966.  Both of Ryan’s strikeout records still stand today. 

Before you say, “Well, he played a whopping 27 years,”… it took Ryan 17 years into his major league career to break the strikeout record of 3509 that took Walter Johnson 21 years to set.

But Ryan didn’t stop at strikeouts. Ryan also broke Sandy Koufax’s no-hitter record when he pitched his fifth no-hitter on September 26,1981 against the Dodgers. He went on to pitch 7 no-hitters, his last at the age of 44 in a Texas Rangers uniform. To this day, no pitcher has thrown more than 3 no hitters. 

By the way, I didn’t just pull these stats out of my memory bank. In fact, I never really followed baseball much as a kid. I am more of a football fan. However, fresh off starting to watch the Netflix, Inc. (NASDAQ:NFLX) special “Quarterback,” I got sidetracked and watched a fantastic documentary, also on Netflix, on Nolan Ryan, “Facing Nolan.”

If you like inspiring stories, it’s a great one. 

Fear Of Failure Limits Your Potential For Success

Aside from all of these great records that Nolan Ryan accumulated, he also holds one more record. He walked 2795 batters, walking over 50% more than any other pitcher in MLB history and 839 more than second place. He also held the record for most wild pitches in several seasons. 

These two stats showcase his style of high-risk, high-reward pitching, but are argued to be reasons why he never won the Cy Young Award.

Ryan is not the first sports superstar to have a few “blemishes” on a stat card. For example:

• Ex-New York Yankee, Reggie Jackson ranks fourteenth in home runs, but dead first in strikeouts. 
• Ex-quarterback for the Pittsburgh Steelers, Terry Bradshaw, was all about throwing the deep ball, but threw a good amount of interceptions on his way to leading the Steelers to four Super Bowls. 
• In fact, staying with football, if you look at the top 15 quarterbacks by interceptions thrown per season, it includes some big names, with Brett Favre ranking number two on the list. The top 15 also includes Dan Marino, Eli Manning, Drew Brees and Peyton Manning.

My point here is that sometimes you need to take great risks to achieve great success, even though this may result in experiencing mediocre moments. And investing is no different.  

Had Ryan selected a different career path…say microcap investing…I’d venture to say that it’s likely his mindset and tenacity to achieve greatness would have made him as successful an investor as he was a pitcher.

Throughout my 30+ year full-time investing journey, I’ve been slinging stocks. It often happens that when I’m “pitching” a stock to someone, they will say something like this: “Why are you buying the stock? It’s so small.. it only has two or three million in revenues. It’s too much risk, it’s never going to work.”

When it comes to stocks, I’ve never been afraid to lose. Taking some big chances on interesting microcap and nanocap stocks is just my nature. Moments like what occurred when I waited 15 years for Koru Medical Systems, Inc. (NASDAQ:KRMD) to rise from 10 cents, selling most between $8 and $12 and more recently, KTEL in 2021, now up 316%,can be life changing. It’s scores like these that compensate for the blemishes that don’t pad the stats…and I have had my share of blemishes.

Even some of the greatest investors make mistakes.

“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game” ~ Peter Lynch, One Up On WallStreet

The cool thing about investing is that if you manage your risk properly, one miss will not define your portfolio or investment career. You can be right some of the time and still have amazing overall returns  because the most you can lose on a stock is the capital you put into it, yet the most you can win is infinite.

A lot of my stocks don’t work. The beauty of the stock market is that if you are wrong, if you put $1,000 up, all you lose is $1,000. I have proven that many times.” – Peter Lynch

“In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” – Peter Lynch

A crucial step in a championship investing journey is to stop paper trading and start investing with real money so you can experience all the decisions and emotions that come with it. You may also need to define your tolerance for risk. Maybe you have very little and only want to invest in stocks that have a large margin of safety, or in 50 cent stocks selling for a dime. And there is nothing wrong with that. There’s also nothing wrong with hitting base hits consistently like Pete Rose did, setting the record while playing for the Philadelphia Phillies.

We all have different tolerances for risk, but, for me, I love the game too much not to take some crazy chances where the outcomes may be uncomfortably uncertain, but potentially very large.

This is where you can have some of your biggest gains because other investors are waiting for a more comfortable entry point.

Manage Risk

Please do not take what I am talking about out of context. You can still take big risks or bets and manage risk at the same time. For example, maybe you set aside a small part of your portfolio to invest in some speculative companies that meet some set of multi-bagger criteria.

My initial investment in Koru Medical Systems, Inc. (NASDAQ:KRMD) was tiny, but grew as a percentage of my portfolio as the stock price climbed and I added more to my position as the story became less risky. Ironically, the stock might be a riskier investment today, at $2.40, than when I first bought it at 10 cents. 

It could also mean going all in on a company that is being priced as overly speculative, where your research tells you otherwise. 

One of the things I like to do is to have fun with what I call “run to one million” bets. This is a portfolio I set up in 2017 to turn around $5k to $1,000,000 by cycling concentrated bets on one to three stocks that I think have at least 100% upside in the short-term, constantly reinvesting the proceeds in a concentrated fashion after a position hopefully doubles (or sell it if the bullish thesis has changed).

It takes 8 doubles to turn $5,000 into more than one million dollars. Before 2022 came along, GeoInvesting was averaging seven doubles per year. Now that my team has become comfortable with the new market environment, we are back to swinging our bats, connecting with 7 doubles across our Model Portfolios. A new strategy/product I have been working for the past 18 months on has hit 13 doubles. So, I am getting confident that my run to a million portfolio has some great odds of working out. Spoiler alert..It’s getting close, 🙂… Stay tuned.. I hope!

So, if you have a stomach for extraordinary risk, size your bets accordingly and keep swinging. 

For more information on my new product, which will include tools designed for the microcap investor, get updates here.

Furthermore, we recently conducted our August 2023 Live Monthly Open Forum, a comprehensive session aimed at providing our subscribers with a thorough update on recent developments over the past month. This engagement also involves an interactive live Q&A segment with our members. The following clips encapsulate key highlights from this forum.

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Subscribe Now Tweets From Maj’s Feed.

Even more relevant in illiquid microcaps, where barring significant developments, prices set as stop loss limits should actually be thought of as buying opportunities. Base decisions to hold a stock on the value of the biz, not on arbitrary short-term changes in the stock price. https://t.co/g67eCXC6RO

— Maj Soueidan (@majgeoinvesting) August 7, 2023

Looking forward to tomorrow. The meat of microcap earnings season has begun. Crawford United Corp (OOTC:CRAWA) did it again… Absolute standout. Reported Q2 Adjusted EPS of $1.04 vs. $0.52 this morning, handily exceeding estimates of $0.60. Whopping P/E of 8x on run-rate EPS.. Only up $2.00 (7%). 😂

— Maj Soueidan (@majgeoinvesting) August 9, 2023

JJ, Thanks for making this video. Charlie Munger gives Li Lu $80M. Li Lu turns it into a cool $1.2B. https://t.co/P810fI7Wbq

— Maj Soueidan (@majgeoinvesting) August 10, 2023

JJ, Thanks for making this video. Charlie Munger gives Li Lu $80M. Li Lu turns it into a cool $1.2B. https://t.co/P810fI7Wbq

— Maj Soueidan (@majgeoinvesting) August 10, 2023

“Thinking, Fast, and Slow,” by @kahneman_daniel, another worthy entry in @RTelford_invest‘s list.

Are you a System 1 or System 2 investor? Impulsive vs. Analytical. Or somewhere in the middle? 3/5 pic.twitter.com/ktfBUXtmkg

— Maj Soueidan (@majgeoinvesting) August 10, 2023

“Super Stocks,” by @KennethLFisher. @RTelford_invest breaks down the Super Stock checklist. 5/5 #SuperStocks #investingtips pic.twitter.com/hbIkOcH055

— Maj Soueidan (@majgeoinvesting) August 10, 2023

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