Globe Trotting Curiosity

The greatest part about sports or capitalism is that you just don’t know what is going to happen next. So, if you want to see or participate in something that may turn out great, it pays to always be curious and never convinced. The biggest upside is located at the intersection of doubt and change.

George Mikan was the most dominant force the game of basketball had ever seen. The first superstar of the new NBA, rules were changed because of his 6 foot 10 inch size and power. But, nobody could stop his Lakers from becoming world champions five times from 1949 to 1954.

A guy named Abe Saperstein who stood 5’3” somehow had a vision for the game that outstretched any other. He coached a team called the Savoy Big 5 that he built from high schoolers in Chicago. He drove the only five members of the all-black team stuffed in his car to each game beginning in 1927. Abe wore a jersey underneath his suit in case they ever needed one white substitute. Trying to imagine what would appeal to even more good players, Abe changed the name to the Harlem Globetrotters.

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Mikan’s all-white championship Lakers team was challenged to a game by the Globetrotters. They were not entertaining crowds with tricks back then, they were beating opponents with a new brand of fast-paced basketball, a completely different game than Mikan was dominating. The Globetrotters would play any team they could find in segrated leagues, and their record in straight-up competitive games was 397-32.

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Nobody gave the Globetrotters a chance to compete with the Lakers when they agreed to play them in a real game February 20, 1948. At a time when the all-white professional league was having trouble with attendance because of its slow pace, the Chicago Stadium’s 18,000 seat arena was sold out for the Lakers versus Globetrotters.

Mikan’s Lakers cruised out to an early halftime lead. The Globetrotters adjusted and double-teamed Mikan. Sweetwater Clifton (left) and Babe Pressley (right) held Mikan to 6 points in the second half and drew a technical foul in his frustration. The Globetrotters came all the way back and shocked the sport, winning 61-59.

"Genius..means little more than the faculty to perceive in an unhabitual way." -William James

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The Lakers took their opponent much more seriously when they played a rematch the following year. The Globetrotters won again. This time they built a lead large enough to include some crowd-pleasing antics near the end. An even bigger stage was then imagined.

The little team crammed into one car went from playing anybody they could find, to building a business that transcended any league. No holdouts, strikes or protests, they decided making smiles around the world can be a recession proof booming business.

As a traditional sports fanatic with 5 kids, I can say without hesitation that a Globetrotter floor ticket (less than the cost thirty rows higher in what might be half-hearted NBA game) is by far the best ROI as dad. I take one kid each year and enjoyed talking about the history of this team, when my daughter wondered why Sweet Lou Dunbar was crying at halftime when they retired his number.

I guess that is why I like reading before I go somewhere, to provide the history of just how meaningful some of those shocking changes really are. You never know what is going to happen next.

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Like Mikan’s Lakers, the United States team of stocks command the most attention and capital for good reasons. I am not selling any of my U.S. stocks. But, I think there are a few teams likely being underestimated if you are willing to trot the globe.

"Doubt is the origin of wisdom." -Rene Descartes

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Investors do not like to bet on underdogs. As you can see, if you compare the size of the U.S. economy to the amount of tickets bought to get in its Stock Market, we are paying a huge premium in market capitalization for what many perceive as the only game in town.

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Some investors like to measure U.S. stocks by PEG (Price/Earnings to Growth) ratios. It may also be of interest to apply a wider lens for teams not even allowed in that league. Many dismissed the Globetrotters faster pace as reckless and way too risky. Just don’t be surprised when they win some games that way too.

Then, actually study the different styles of play that might be changing. Fifteen years ago about one-third of China’s GDP was domestic consumption. Today it is two-thirds. That is a staggering transition and a giant leap in standards of living.

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And, the crowds are just bigger.

If you look at E-Commerce as a % of all Retail sales, China has actually jumped past the U.S. already, at more than 20%. What is even more startling is that penetration rate is not only largest of any country, but still growing the fastest.

Growing even faster is a change in how they pay for stuff. Mobile payment users in China are more than 10x greater than the U.S.

Despite all that change, there is still plenty of doubt. The original Goldman Sachs BRICS fund, coined by an economist who predicted where the fastest emerging market growth would come from, was recently shut down after the crowd of investors voted with their feet and sold, assets falling about 90% from its peak.

The year after the Globetrotters beat the Lakers again in their rematch, the Boston Celtics made Chuck Cooper the first African American drafted in the NBA in 1950. Shortly after that, Nat “Sweetwater” Clifton from the Globetrotters signed a contract with the New York Knicks.

So, its own success led to another change. Bigger than any player, game, or league, the Harlem Globetrotters decided to play capitalism from that point on. A business that sold to customers year-round in 123 different countries, was an even better idea.

Curious > Convinced

On Twitter @RyanKruegerROI