Jerry Seinfield recently published “Is this Anything”, a collection of notes written by him on his yellow pad over decades.
One of them stayed with me:
I gamble a little
I’d probably gamble more, but I don’t win so I stop.
I don’t understand gambling addictive.
My brain works like
LOSING MONEY:STOP ACTIVITY
MAKING MONEY:CONTINUE ACTIVITY
Gambling is an assortment of different games and bets you make on them.
Lot of people try to game the game and are serious about understanding the mechanics and over the years there have been several of them who have used mathematical/statistical models to excel.
Now they are playing a different kind of game and as is usual with people who indulge in these games.
Everyone has their own agenda.
Here is a list of different games that I have come across:
The people who are building and using statistical models to understand and beat the game are playing not just to win but to show, how they are superior and can beat anything with their brainpower.
Of-course this is a small majority.
Psychologists have singled out the human ego as a major influence on the negativity of gambling. It is the ego of the person that refuses to see defeat and refuses to let go of a losing situation.
This person has an innate need to compete and play to win.
They will go to any length to win the odds.
They will work to get a formulae-they might not even be academic but wouldn’t mind cheating also if they have to but winning is their mantra.
This is sometimes by design but often just a pretender who thinks of him/herself as an expert.
Gambling is game of chance, now as we saw above some people try to game it, however then there are others who think of their lucky streak or as they say “luck by chance” as expertise.
Inability to differentiate between expertise and chance gives them so much confidence that they not only want to play the game but even teach others how to.
The Investing Parallel
For those who come into equity markets, humility is the first lesson.
Beginner’s luck might make you feel confident, however accepting luck for what it is becomes very difficult.
As most real experts will tell you most of the time, they don’t have all the answers.
However, the person who posts their winning trade daily making it look like that they only have winning trades is fooling only him/herself.
Equity markets knows no one who wins every day, sometimes you lose and that’s OK but to pretend winning every day can lull you into looking at everything with a rosy tint.
The real deal is always to leave you ego out of the door, be humble every day.
Not everyone will be having the time to understand every business that they invest in but if that is the case, leave your money to professionals.
However, if you are going to invest yourself in the market, be humble, set-up objectives and process of your investing and then follow the same with rigour.
You might not have all the tools at your disposal, but you can seek help, experiment, and learn from others, not just by reading but also by talking, sharing and doing.
Yes, the most valuable lessons might come by losing but that’s OK till you don’t repeat the mistakes.
Remember again-your stocks don’t know you love them or that you even own them, and no one cares about your expertise.
Think only about your process and your XIRR and not about proving yourself to someone because frankly