What game are you playing?
Last weekend I did something I have never done before. I spent all weekend at the swimming pool.
My eldest, Poppy, took part in her first full swim meet.
I did not swim competitively as a child, so this was a learning experience for me. I now know how to read a meet sheet and the importance of a highlighter.
As I sat there for about 12 hours, I pondered on the sport – there are so many great lessons to take from swimming into the game of life and investing.
In a swim race you enter a lane, and you stay in the lane. You can’t get pulled into someone else’s lane. The focus is more on your own race than what anyone else is doing. The heats are held such that often, the goal is not to win the race but to beat your personal best time. Your benchmark as a swimmer is your own success. Your goal is clear – reach the end of the pool in a better time than you have before. A 10 year old swimmer does not use the Olympic time as their benchmark.
There are strict and clear rules – break them and you get disqualified. My daughter swam a great race and got disqualified for touching her goggles after they fell from her eyes (who knew?). It doesn’t matter how great a race you swim if you break the rules.
It can be hard for investors to stay in their own lane. The stock market is driven by millions of humans, all swimming in different lanes. Some are only interested in what happens in the next minute, some are looking out decades. Some are happy with a 6% return, others are looking for 50%. It’s hard not to look over the rope and peer into what is happening in the next lane. Next thing you know, you are swimming in someone else’s lane. Even worse, you are swimming their stroke. It’s easy to pick arbitrary benchmarks and think they matter.
There are rules in successful investing but they are less clear, and the consequences for breaking them aren’t always obvious until its too late. Taking on leverage, putting all your eggs in one basket – those are the things that can blow you up, get you disqualified. It doesn’t matter how well you did in the years preceding a bear market, if when it comes, you panic and sell. It doesn’t matter how well you have done in the bull market if you get carried away and leverage up at the top. It’s like touching the goggles that have slipped – it’s so tempting but whatever you do, you must not do it.
Naval Ravikant* recently spoke about life as a game. “All of life is games. You start out with the family game, you do the school game, the grades game, the getting girlfriends and boyfriends game, the getting married game, the having kids game, the making money game, the having a career game, the getting famous game.”
These sorts of games, they suck you in. “You have to play some game – you are on this planet, you are alive, you may as well play something. The question is what game do you play and how do you get out of the game so you are not just trapped playing that game forever?”
The answer is you make sure you choose your games very carefully.
Pick the stroke. Stick to the stroke. Stay in your lane. Focus on your personal best.
Or you can make sure that you win the game. And here’s the important bit. When you win it, you realise you have won and you say ‘I am now free of this’. The only way you can realise you have won is if you set the definition of winning early on. That way, when you go past it you will know you have won. You can then be free of the game.
“The reason to win the game is to be free of it.”
Georgie
georgie@libertywealth.ky
*I highly recommend Tim Ferriss’ conversation with Naval. You can catch it here.