Thinking Outside of 'The Game'

"Men in the game are blind to what men looking on see clearly." ~ Chinese Proverb

Does it really matter if we win or lose the game?  If so, who is it that we are competing against?

The phrase, caught up in the game, is traditionally attributed to "blind ambition" and the emotional trappings that accompany the desire to win the game.  While there is nothing wrong with ambition, there is no reason why it needs to be blind...

For example, I find it difficult to believe that Investors, Home-buyers, Hedge Fund Managers, or CEO's of Financial Services Firms wanted to be burned by the current financial crisis.  I do, however, find it much easier to believe that all of the afore-mentioned players found themselves, knowingly or unknowingly, caught up in the game, thereby making it nearly impossible to "win."

"It is better to conquer yourself than to win a thousand battles.  Then the victory is yours.  It cannot be taken from you..." ~ Buddha

The beauty of financial markets and the game of investing is that you may choose your level of participation, your entry and your exit.  In fact, what most players in the game fail to recognize is the greatest control variable:  The player may also choose their competitor.

Logic would then have us ask, "Who is the best competitor to select?" Upon answering the question, we may then devise our strategy to win:

• Choose your competitor wisely:  Put simply, one may never "lose" the game if the competitor is chosen correctly -- and that competitor is you.  Once you select your self as your competitor, all that remains is the acquisition of self-knowledge -- the recognition of your ignorance -- the source of your weakness.  If you limit your competition to your self, you will always win, especially if your "reward" is the process itself, and the process involves the recognition of mistakes as tools for growth.
• Replace "the desire to win" with "the objective to learn:"  The problem with the human brain is that it is not wired for financial success -- it is reward-centered -- it seeks the end and fails to appreciate or even recognize the means -- it is the rat seeking the shortest distance to a block of cheese.  If the desire for the reward is removed, or at least shifted lower in priority, then the capacity to achieve the reward is increased -- it is the desire for the reward that often inhibits our ability to reach it.
• Turn down the noise:  The media noise mantra of "beating the market" is feeding your desire. Where did your ideas come from?  Did they originate in your mind or from Jim Cramer?  Do you really need to read The Wall Street Journal, BusinessWeek, The Economist, Financial Times, and all of those Blogs to be a good investor or trader?  Could you get by on just a few sources of information?  Do those sources of information exist to sell advertising?  Do they appear to thrive on inciting emotion or do they present information in a factual and unbiased manner?  If it is data that you need, then why must an opinion be attached to it?  Was your last decision influenced by an outside source?  Did you seek the source or did it seek you?

"Freedom from the desire for an answer is essential to the understanding of a problem." ~ J. Krishnamurti

I like to believe that the philosopher's greatest tool for growth is the mistake.  If our focus is process-centered, or on "how we play the game," then our attention to winning or losing, and the damaging emotions attached to these ends, no longer impede our capacity to perform -- we enable our self to think outside of the game...

By virtue of finding reward in the journey, the blindness created by the desire for the destination is removed... and we begin to see...

Related Posts:

The Essence of Understanding

Know Thy Risk

Comments

[Next Gen Politics]

Great post once again. I'm curious what you would have to say about the fact that many employers these days have done away with the traditional pension, and some have even stopped contributing to 401K's. With this in mind, isn't it difficult to choose your level of competition? It seems like it is chosen for you if you want to survive after retirement. Again, great post thanks. Hope to hear from you again soon.

Jerame Clough
-Next Gen Politics

[The Financial Philosopher]

Jerame:

It is possible that I do not understand your question but I do not see an employer as a factor in choosing one's direction with investments or in life unless one chooses it that way.

Certainly an employer may have influence, and this point is one that is quite arguable, but the influence can only be given by the "influencee," the employee, to the employer.

It is the employer's position to stay profitable, which is the reason for the decline of pension plans. The employee's position should be to make a life with their money -- not make money with their life...

Also, with regard to retirement, the employer, along with the government and social conventions, have "defined" retirement. Once the individual defines retirement for them self, the perspective changes...

I am interested in your points. Please elaborate if I have misunderstood them...

Kent

[Ari Koinuma]

Hey Kent,

A great post, as always.

I'm going outside the context of financial realm, but I think that there are plenty of occasions where we lose the game against ourselves. One of the major reasons is precisely because we fail to identify the correct opponent -- our self, or rather, the portion of ourselves that are wounded, weighed down, or ungrown.

Addiction is an example of this. Addiction drive our behaviors out of alignment with our higher self. Some substances are designed to cause this by manipulating our physical body. But we also get hooked on plenty of things without such mechanism. And we keep losing.

I wonder if that's one situation where we must play to win??

ari

[The Financial Philosopher]

ari:

I like your point and would follow that, when we are speaking of the "game of life," it is common to engage in self-defeating behavior, just as in the game of investing.

Similarly, with investments, we "realize" a loss or gain when we sell the shares we purchased (a redemption). In life, I believe we do not realize a total loss or gain until we die (another kind of redemption).

Being an optimist, I would frame the drug addiction scenario as a "low point" or perhaps a point at which we are "losing" to ourselves; however, in the game of life, we have not "lost" unless we die while we are losing...

In other words, there is always time to win as long as we are still alive...

Of course, there is always life after death but that is another conversation...

Thanks for the thoughts...

Kent

[Penguin]

Nicely said!
Independent thinkers have better than average chance for success. This applies to any occupation or business. My $0.02

[The Financial Philosopher]

Thanks, Penguin...

It certainly is difficult to be an "independent thinker" when the information consumed comes with an opinion attached, which is why I have dramatically reduced my consumption of newspapers and periodicals and dramatically increased the consumption of books, the older the better...

Thanks again,

Kent

[Vered]

Turning down the noise is important. As a long-term investor, I am also turning down the noise of panicky articles that warn against a recession, or even a repeat of the Great Depression.

[The Financial Philosopher]

Vered:

You are wise to control those things that can be controlled. Allocation of attention is one of those control variables.

Thanks for the comment. I really like your blog, by the way...

Kent

[Ned]

I recently wrote up a post on my blog about metaphors we use for life, the game being one of them. It's interesting how these metaphors color our experiences, making certain aspects more apparent and hiding others.

Perhaps if we looked at our economy as a body or organism in which we all play an integral role, we would not be so willing to ruin each others financial futures. This seems to be where the problem lies in our system. A person benefits by screwing over the other guy.

[The Financial Philosopher]

Ned,

I agree with your implication that metaphors can be misleading. Humans are visual creatures so the use of metaphors can be both useful and distracting, depending on how they are used...

Your use of a "body" as a metaphor for financial markets is interesting. You are correct that some benefit by "screwing over" others. Isn't this the same with our "body?"

We often engage in self-destructive behavior by succumbing to our desires. Did we really need to eat the entire piece of chocolate cake? Do we really need more money? Why do we put our health at risk for monetary and social status?

In my view, this is another form of "screwing over," except in this case, it is ourselves...

Thanks for provoking thought...

Kent

[nonzero]

RE: process-centered VS. reward-centered.

My opinion is the process and reward cannot be separated; both are parts of a whole thing. Remember, at the end of day it is the outcome/reward that counts. In investing/trading, the greatest challenge is to know when to exit (take loss/profit), of course you need a process in the first place.

Enjoy your post as always!

[The Financial Philosopher]

nonzero:

I agree. My distinction, however, is that the process and the "reward" are one and the same.

If the process is the reward, then the focus shifts from the end to the means -- it is the fulfillment found in "the journey" rather than seeking only "the destination."

In investing/trading, many investors or traders will find themselves disappointed by "results," especially if the benchmark is something other than themself...

Thanks for provoking thought, as always...

Kent