Rafa's Magnificent Mallorca

I had the great pleasure of spending five days on the incredibly beautiful island of Mallorca, which is part of Spain but south of the mainland. The main purpose for going there was to take tennis lessons over three days at the?Rafa Nadal ?Academy. I had reasonably high expectations before arriving, and after seeing the facilities, I was even more excited. I’m not the only one who thinks so highly of the academy, as this photo shows how many cars there are in the parking lot.

The academy houses approximately 140 students who are not only there for tennis training but also to attend school full time. It has a terrific fitness facility, multiple dining areas, soccer facilities, and of course, numerous tennis courts. The courts are both indoor and out, with a large number of them being clay, which is not surprising given how prevalent clay courts are in Spain.?Rafa Nadal ?is the best clay court player in history, so one would expect there to be a large number of clay courts.

Here is what one of the indoor clay courts looks like.

The academy has a hotel that is expanding due to strong demand. It also has a great pro shop and a very interesting museum dedicated to Nadal and his values.?

Here I am after a lesson in the museum with the Rafa hologram.

And what would a Rafa Museum be without showcasing some of his many trophies he has gathered over his illustrious career.

No one has ever dominated a tournament like Nadal has the French Open. Of his 22 Grand Slam titles, currently the most in the history of the Open Era, 14 were won at the French Open, which is played on clay. Here is one of his French Open trophies.

And with Roger Federer having announced his retirement last week, ending his career with 20 slams,?Novak Djokovic ?is the only player who has a chance of surpassing Nadal in terms of Grand Slam titles.?Djokovic ?has 21, and the next closest active player is Andy Murray with three. It’s safe to say that it will be many years before someone comes close to Nadal and?Djokovic .

And speaking of Federer’s retirement, this is what Rafa wrote on Twitter in response to the news.

Nadal is arguably the hardest working, most dedicated player in tennis history. His commitment and discipline are legendary. His family and close advisors are his rock, and he lives by very powerful core values that help guide him on and off the court. This photo shows a wall with each of the values listed at the entrance of this part of the museum. To put these values into action, there are interactive games that allow participants to focus on each of the values for success.

His core values are:

• Teamwork
• Courage
• Passion
• Effort
• Consistency
• Fair Play
• Temperance
• Determination
• Emotionality
• Self-confidence

My summary of his values would be that no man is an island, and to be successful, one can never rely solely on themselves. It’s imperative to build a great team around you, as every member can bring a particular strength to help elevate you to higher levels than you could ever do on your own. You have to care deeply about what you do and put in the consistent work needed to ruthlessly identify where you’re falling short so that you can improve in these areas. In addition, you also need to be aware of what you’re doing well so you can build up the self-confidence and muscle memory to exploit those strengths to be courageous and take prudent chances when you’re playing matches. And because there will always be setbacks, one cannot keep growing and improving without the fierce determination to persevere through them and use them as learning experiences. It’s also vitally important to stay calm and train yourself to keep your emotions in check so that you can remain clear-headed and alert. Finally, never cheat and cut corners. This will always catch up to you and lead to great regret.

Here is my best attempt at conveying my Rafa-type determination.

Mallorca is one of the most beautiful places I’ve ever visited, and I’ve had the great fortune to go to many places in the United States and around the world. Along with its beauty, there is so much tranquility.

There are so many beautiful beaches. The most accessible ones have sand, while some of the more remote ones are rockier. This is obviously not very comfortable but quite beautiful.

Enjoying a nice lunch on a beautiful day at this same beach.

Sunrise on our beautiful veranda at our amazing hotel.

At the academy, we had two days of two two-hour sessions and a third day with one two-hour session, for 10 hours of instruction and playing.?

Here I am with Heather after one of our sessions with Menorca in the background.

We did drills and then played with different people to see how well we could apply what we learned.?

These are some of the instructors.

We can talk and train, but it ultimately comes down to what are you going to do when you’re playing to win (and not lose). When faced with those key moments when you have to make important decisions with imperfect information, and you have to read the situation quickly while also having to overcome your fears and doubts as well as not being dragged down by overconfidence and all the other things that make us fallible human beings.?

These challenges are compounded in a?sport like tennis , where it is often moving very fast, and it’s not just you against the ball.?It’s you teaming up with the ball to place it effectively with a combination of speed, angle, and spin such that where and how it lands and at the speed at which the ball travels is intended to increase the chances of your opponent making an error or not being able to get to the ball. Much easier said than done.

I read Rafa Nadal’s autobiography during and after the trip. I highly recommend it. This is a long passage, but it’s worth citing in its entirety to shine a light on the challenges of playing tennis consistently well.

“You might think that after the millions and millions of balls I’ve hit, I’d have the basic shots of tennis sown up, that reliably hitting a true, smooth, clean shot every time would be a piece of cake. But it isn’t. Not just because every day you wake up feeling differently, but because every shot is different, every single one. From the moment the ball is in motion, it comes at you at an infinitesimal number of angles and speeds, with more topspin, or backspin, or flatter, or higher. The differences might be minute, microscopic, but so are the variations your body makes—shoulders, elbow, wrists, hips, ankles, knees—in every shot. And there are so many other factors—the weather, the surface, the rival. No ball arrives the same as another; no shot is identical. So every time you line up to hit a shot, you have to make a split-second judgment as to the trajectory and speed of the ball and then make a split-second decision as to how, how hard, and where you must try and hit the shot back. And you have to do that over and over, often fifty times in a game, fifteen times in twenty seconds, in continual bursts more than two, three, four hours, and all the time you’re running hard and your nerves are taut; it’s when your coordination is right, and the tempo is smooth that the good sensations come, that you are better able to manage the biological and mental feat of striking the ball cleanly in the middle of the racket and aiming it true, at speed and under immense mental pressure, time after time. And of one thing I have no doubt: the more you train, the better your feeling. Tennis is, more than most sports, a sport of the mind; it is the player who has those good sensations on most days, who manages to isolate himself best from his fears and from the ups and downs in morale a match inevitably brings, who ends up being world number one.”

There are enough statistics in tennis to prove over and over again that it’s a game in which the winner is the one who makes the fewest mistakes versus the most winners.

It’s akin to Warren Buffett’s first rule of investing: Don’t lose money. What’s the second rule? Don’t forget the first rule!

All points in tennis end on either winner (the opponent doesn’t touch the ball, or if she does, then there’s no chance of her being able to return it) or an error in which one of the players hits it out or into the net. Statistics consistently show that points end with three errors for every winner. Thus, getting your opponent to make an error is typically a better strategy than trying to craft winners unless you’re presented with a very high probability shot that can be turned into one.

The approach to teaching at the academy had a more laid-back Mediterranean feel to it versus in the United States, which is more intense and seemingly more outcome-oriented. Instructors were a lot more philosophical and more relaxed as the primary goal was just to keep the ball in play because you can’t win points if you’re unable to do this consistently. This necessitates a determined but serene attitude and frame of mind in which keeping calm is always paramount.?

There are constant emergencies on the court in terms of recovering from being out of position, having to run for balls, contending with a different spin, pace, angles, placement, fatigue, nerves, etc. that it’s vital to not add to the emergencies by rushing and being panicky and overaggressive. The slower you execute your shots and the longer the ball stays on the racket, the more control and feel you will have for the ball and the better chance of directing it to where you want it to go, which of course, assumes you know where you want it to go versus playing randomly.?

Playing on clay had a calming feel which made what the instructors say more applicable for me. Calm was the operative word being who I am naturally led me to think about it more deeply. I like to come up with anagrams to help emphasize key attributes of a word, so I did it for CALM. This is what I concocted.

Consistency

Accuracy

Loft?

Mind(set)?

I have come to believe that consistency is one of the most underrated attributes in people. It has immense value. I have played against a lot of people who have more talent and can hit the ball harder than I and who can make some incredible shots. And yet, they can also be very inconsistent. As a result, when you’re playing a match that has over 100 points, the math is pretty powerful. One player who gets 80% of his shots over will need three shots to get to the point in which the chances of making an error are close to 50% (49%), while one with a 70% success rate will have a 51% chance of making an error after two shots. This differential adds up in very significant ways such that the odds are heavily in favor of the more consistent player unless the inconsistent one has an incredible serve that can lower the other person’s percentage of success.?

So much of life is about showing up regularly. It doesn’t have to be magnanimous. Just do the basics consistently and competently. This is one of the reasons I do my weekly blog. It helps build up the muscle of consistency, reliability, and accountability.?You don’t have to be the best, but if you are consistent, your chances of success go way up. Others may have more natural talents or gifts but if they’re less consistent and not very reliable, then those strengths are greatly diminished and diluted.

After one can consistently get the ball back over the net and keep it in play, then accuracy takes on greater importance as this can help put your opponent in a more defensive posture to force an error or help you generate a winner. And of course, accuracy isn’t just important in tennis, but in all aspects of life, especially in the world of finance and money. When people part with their money and entrust it with others, it’s mission-critical that it be tracked accurately because mistakes can shatter customer confidence, let alone lead to very negative consequences.?

Because of how vitally important it is to be accurate in life, I do my best when I communicate verbally or in writing to do so in a very precise and accurate manner. I have to take accountability for getting my message across so that the recipient of my message can understand what I’m saying. This requires that I be precise and accurate. I admire people who choose their words carefully and are hesitant to make declarations or commitments without having thought them through. When someone spews a bunch of jargon and generalities, my antennae definitely goes up and I find myself very much on guard.?

Now let’s turn to the loft. A great shot is only great if it goes over the net and stays in the court. And for the ball to go over the net, it needs to have enough loft to do so. This is another way of saying that every shot should have a margin of safety in terms of height (and spin) so that the chances of clearing the net are quite high (pun intended) as well as landing in the court. Having a plan for the height and spin of the ball makes that become a conscious decision, which is very helpful once a player can habituate it as it should lower the number of errors. The same is true for investing and in life overall.?

Having a margin of safety mindset in many aspects of life can avoid catastrophic errors. Keeping a safe distance between the car ahead of you is an example of creating a margin of safety, akin to loft in tennis. Taking your time and not rushing lessens the chances of mistakes. Creating physical and mental space to allow the time to avoid problems is so important in all aspects of life.

And when it comes to investing, don’t bet the farm. That is why it’s prudent to diversify or focus on those investments for which you have a deep understanding, as this will help you determine when the odds are in your favor such that the rewards will outweigh the risk. Conversely, it should help you identify when you are taking more risk than you should so you can stay away from those investments until they offer more compelling value.?

The?final component is mind(set) . I added the “set” to it for a pun because of the obvious reference to tennis being played in sets but for the critical need to have the right mindset when playing. We have to be constantly using our minds while also having it be as clear as possible.?Tennis has so many ups and downs ?that it’s vitally important to develop strategies to cope with the roller coaster ride. One cannot get too high or too low. Each shot has to be filed away and used as a learning experience versus an opportunity for self-flagellation or overconfidence.

This applies equally to investing and everyday life. I look at my interactions with the world as constant learning experiences and laboratories for testing assumptions, predictions, finding patterns, and establishing cause and effect in order to become a better decision-maker to avoid unnecessary risk and to capitalize on opportunities as well as to just make life a little bit easier and more interesting.

From?a CWS perspective , we’re clearly licking our wounds with the?Federal Reserve having shifted ?dramatically from being very accommodative to now incredibly hawkish with aggressive interest rate increases and balance sheet reduction. And while we placed effective hedges for most of our portfolio through 2022, 2023 will be a very different story as we will see meaningful increases in our debt service.?

We have had such?success with our variable rate ?strategy that it feels like I came on to the court to play an opponent I have beaten consistently and rather easily (fixed-rate loans) for many years, only to be shocked at how well he is playing and how easily he is beating me. I can get angry and protest and say how this isn’t fair, but what would that accomplish? All I can do is deal with the reality at hand, do my best to fight through it, learn from it, and become better prepared in the future. Great tennis players, like successful business people, are problem solvers. Both have to be vigilant and ruthlessly honest about what is not working, what your opponents are doing better, and devise solutions to overcome these obstacles and shortfalls.

Visiting Mallorca and attending Rafa’s academy was one of the highlights of my life. I’ll end this post with a picture of our group of graduates holding our diplomas.

If you ever have the opportunity to visit Mallorca, I strongly encourage you to do so and rent a car if you do.