For What It’s Worth: Skin in the Game
By Joel Dresang
When someone has skin in the game, it means they have a stake in an outcome and thus, are more invested.
Kyle Tetting has talked about research showing that mutual funds tend to have better results if their portfolio managers personally are invested in the funds. What’s more incentivizing than having a share in the results? By allying their interests with investors in their funds, the managers would be motivated to minimize risk and optimize reward.
Credit for coining the term commonly goes to the Oracle of Omaha, Warren Buffett. But as wise and quotable as the billionaire is, the internet can easily overattribute him. As Yogi Berra is said to have said, “I never said most of the things I said.”
The late wordsmith and New York Times columnist William Safire confronted Buffett about the origins of “skin in the game.” Safire wrote in 2006 that a Buffett spokesman “denied unequivocally that his boss was the coiner …and refuses all responsibility for the viral spread of skin in the game.”
In fact, Safire found the expression in an article in the Oakland Tribune in 1912—18 years before Buffett was born. And long before that, “skin” was one of the numerous slang synonyms for money. British criminals referred to wallets and purses as skins, insinuating their leather composition. In the early 19th century, to skin meant to fleece, to separate someone from their money.
One’s skin is intimate, sensitive, precious.
When Job survives his biblical trials by the skin of his teeth, it is the narrowest margin imaginable. When Antonio pledges a pound of flesh in Shakespeare’s “The Merchant of Venice,” he puts his very life at stake.
And, when thick-skinned investors prefer mutual funds in which managers have no skin in the game, well, that may be ill-advised, but it’s no skin off my nose.
Joel Dresang is vice president-communications at Landaas & Company.
(initially posted April 30, 2019)
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