The path to victory is to avoid obvious stupidity. It can be hard to appreciate that the person who avoids losing wins. Winning can happen without explicitly seeking to win.
The word stupidity is important here. Avoiding stupidity is not an argument to do nothing.
Avoiding stupidity is about remembering the obvious, playing in domains where you have an edge, ensuring you are compensated for the risks you take, ensuring you financially and psychologically stay in the game, and having a lot of patience.
The key to avoiding stupidity boils down to knowing which game you are playing. There are two.
Winning or Losing?
Let us explore the difference between a professional game and an amateur game.
Often we focus on trying to be brilliant when we would get a lot more mileage out of avoiding stupidity.
We often focus on trying to be brilliant, yet many great people get far more mileage out of avoiding making stupid mistakes. Amateurs win the game when their opponent loses points, experts win the game by gaining points.
Scientist and statistician Simon Ramo wrote a fascinating little book that few people have ever bothered to read called Extraordinary Tennis Ordinary Players.
In the book, Ramo identifies the crucial difference between a Winner’s Game and a Loser’s Game.
Professionals win points. Amateurs lose them.
Professionals play a winner’s game – they win by being better than their opponent. The outcome is mostly within their control.
In a professional game, each player, nearly equal in skill, plays a nearly perfect game rallying back and forth until one player hits the ball just beyond the reach of his opponent. This is about positioning, control, and spin. It’s a game of inches and sometimes centimeters. This is not how amateurs play.
In expert tennis, about 80 per cent of the points are won; in amateur tennis, about 80 per cent of the points are lost. In other words, professional tennis is a Winner’s Game – the final outcome is determined by the activities of the winner – and amateur tennis is a Loser’s Game – the final outcome is determined by the activities of the loser. The two games are, in their fundamental characteristic, not at all the same. They are opposites.
Amateur games are different. Amateur tennis — likely the level you and I play at — is a loser’s game. The winner is the person who makes the fewest mistakes and lets the other person beat themselves. If you keep the ball in play long enough, your opponent will make a mistake. In effect, amateurs win because their opponent makes more mistakes than they do.
Ordinary people win at games they are not skilled in by letting their opponents beat themselves.
… if you choose to win at tennis – as opposed to having a good time – the strategy for winning is to avoid mistakes. The way to avoid mistakes is to be conservative and keep the ball in play, letting the other fellow have plenty of room in which to blunder his way to defeat, because he, being an amateur will play a losing game and not know it.
While the amateur can’t consistently hit winners, they want to. When amateurs play a Winner’s game, they force shots that have a low probability of winning and a high probability of error. While they might hit the occasional winner, the ratio between winning shots and losing shots is skewed heavily toward losers.
Sometimes amateurs convince themselves they are professionals, but professionals never convince themselves they are amateurs. Professionals know they are not playing the same game as amateurs.
If you are within your circle of competence, seek brilliance. If you are not, avoid stupidity.
Investors Bet on Someone Else’s Game
This reminds me of something.
Warren Buffett used to convene a group of people called the Buffett Group. At one such meeting, Benjamin Graham, Buffett’s mentor, gave them all a quiz. I spent hours searching for this reference, which comes from Benjamin Graham on Value Investing: Lessons from the Dean of Wall Street.
“He gave us a quiz,” Buffett said, “A true-false quiz. And there were all these guys who were very smart. He told us ahead of time that half were true and half were false. There were 20 questions. Most of us got less than 10 right. If we’d marked every one true or every one false, we would have gotten 10 right.”
Graham made up the deceptively simple historical puzzler himself, Buffett explained. “It was to illustrate a point, that the smart fellow kind of rigs the game. It was 1968, when all this phoney accounting was going on. You’d think you could profit from it by riding along on the coattails, but (the quiz) was to illustrate that if you tried to play the other guy’s game, it was not easy to do.
“Roy Tolles got the highest score, I remember that,” Buffett chuckled. “We had a great time. We decided to keep doing it.”
Avoiding Stupidity is Easier Than Seeking Brilliance
The point is that most of us are amateurs but we refuse to believe it.
This is a problem because we’re often playing the game of the professionals. What we should do in this case, when we’re the amateur, is to invert the problem. Rather than trying to win, we should avoid losing.
This was a point Charlie Munger, the billionaire business partner of Warren Buffett made a long time ago.
In a letter to Wesco Shareholders, where he was at the time Chairman (Found in Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger), Munger writes:
Wesco continues to try more to profit from always remembering the obvious than from grasping the esoteric. … It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent. There must be some wisdom in the folk saying, `It’s the strong swimmers who drown.’
And there is so much wisdom embedded in that quote that I’ve printed it out and attached it to my wall.