Mr. Market

Ben Graham may have likened the late New York Yankees owner, George Steinbrenner, to his allegorical Mr. Market.

Manic, myopic and a believer that the market was a “voting machine,” Steinbrenner made life difficult for members of the organization, especially general managers, when results did not meet his expectations. He preferred splashy trades and signings over a long-term strategy of drafting and developing talent.  

In 1990, Steinbrenner got in trouble with Major League Baseball after it found that Steinbrenner paid a gambler to dig up dirt on a Yankee player that was disputing his contract. The MLB banned Steinbrenner from day-to-day operations.

With Steinbrenner out of the picture, General Manager Gene “Stick” Michael went to work unconstrained.

Between 1990 and 1993, Stick drafted, signed, and traded for players that he could acquire at an attractive value and projected to be good over the long run. He gave players time to grow and make mistakes.

Drafted out of Kalamazoo High School in 1992, Derek Jeter committed a league-high 56 errors, in his rookie season in the minors.

Stick told frustrated coaches to be patient.  

By the time Steinbrenner returned from his suspension in 1993, Stick had recruited future Hall of Famers and All-Stars including Jeter, Mariano Rivera, Jorge Posada, Andy Pettitte, and Paul O’Neill. This core would lead the team to World Championships in 1996, 1998, 1999, 2000, and 2009.

If Steinbrenner was Graham’s Mr. Market, Stick was Graham, a believer that over the the long run, the market behaves like a weighing machine and accurately reflects competitive position, assets, and earnings (or hits and runs). Both believed that good judgment needs to be coupled with an ability to insulate decision making from swirling emotional behavior in the marketplace.

When Gene “Stick“ Michael passed away in 2017, Jeter, said, “[Gene Michael] was largely responsible for the success of the Yankees organization.”