The Shohei Principle (Let’s Go Jays)
Blue, not technically Canada’s official colour, may as well be a bonus one these days; so awash is the country in excitement over the Toronto Blue Jays making it back to the World Series. Not since 1993, when Joe Carter hit his iconic walk-off, World Series-winning home run, has ‘the North’ been so gripped by baseball fever. Jay adorned hats are visible everywhere. Strangers on elevators goodbye you with “Go Jays.” People are traveling across the country to catch a game.
Another reason the moment is so captivating for fans is the presence of Shohei Ohtani, one of the greatest to ever play the game (as a baseball fan in Toronto, it’s possible to both cheer for the Dodgers’ defeat and still respect Ohtani’s grace). An exceptional batter and pitcher—a dual role almost unheard of—Ohtani is a two-time MLB MVP whose numbers, at 31, regularly place him in conversations alongside Babe Ruth.
As investors, there is something we can take from Shohei. A reminder both timeless, and given current markets, timely.
To start: investing, as Warren Buffett once alluded to in his iconic 1997 Chairman letter, is a game of swinging at pitches. Many, many balls get thrown your way. Great investors, like great hitters, avoid swinging at bad pitches outside their strike zones—where connection and success are unlikely—and instead wait for the right ones, where they can do damage. Then, they hope to hit well.
Let’s consider Ohtani’s batter numbers and what they tell us.
Ohtani is, first and most obviously, a powerful hitter. According to Baseball Savant, his average exit velocity in 2025 was 94.9 mph, the third highest in the league, while his barrel percentage was 19 versus the league’s 7%.
For those newer to baseball stats, exit velocity measures how fast a ball is hit, and a “barreled” ball is one with the ideal combination of velocity and launch angle—meaning it’s far more likely to do damage. Shohei’s numbers are simply fantastic. When Ohtani swings, he tends to make it count.
But power isn’t the whole story here. Over the years, Ohtani has also developed excellent plate discipline, swinging at fewer bad pitches outside the zone than his peers. In 2024 and 2025, his chase rate was 26%, compared to the league average of 28%. A two-percent difference may seem small, but in an elite environment like baseball (or investing) it can be the difference between winning a championship and being forgotten to history.
In other words, Ohtani is highly selective about the pitches he swings at, and when he does swing, his contact quality is exceptional. A more fitting metaphor for investing is hard to imagine. Investors also face countless “pitches,” strike out often (are wrong about something), but can still win over time by making strong, selective contact and avoiding costly errors. In investing, like in baseball, margins matter.
This is why we say the principle is timeless.
Now, here is how it is timely:
The Shohei Principle contends that investment success requires both the skill to act on opportunity and plate discipline. One without the other leads to mediocrity—or worse. Unfortunately, many investors today seem to be totally forgetting one half of this principle. They are swinging at whatever pitches come their way, stretched valuation or difficult odds be damned. It is worrisome behaviour.
This is something we covered at length in our recent quarterly letter but given the moment and the importance of the principle, we will risk modest repetition here. Financial markets appear to be in an unmistakable “risk on” mood. Equities have reached new highs, credit spreads sit near multi-decade lows, and investor sentiment remains buoyant. Unfortunately, so much of today’s enthusiasm appears to reflect comfort with risk rather than sober assessment of it. Historically, many of the elevated valuations and late cycle signs we observe now have not worked out well for investors.
These are difficult, if not outright bad, pitches we are dealing with.
Arguably, now is a far more precarious moment for investors than present market hubris would suggest. Discernment is called for to avoid investing in equity or fixed income assets whose steep valuations make them potential sources of future capital impairment.
Don’t get us wrong, there are still many great investments opportunities in markets. But the game is tighter, harder.
It calls for plate discipline.
Something to keep in the back of one’s mind as the World Series and AI hype both carry on. We wish our investment friends prudent swings, the Dodgers and Mr. Ohtani luck, and the Toronto Blue Jays better luck.
Let’s Go Jays.