Win the Game You\’re In

\"\"I plan on being the coolest person at my 50th high school reunion.

That will be quite the coup, because (brace yourself) I was rather far from the coolest person in my high school. Since I ran track, I technically qualified as a “jock”, but my jock friends were quick to inform me that I was the nerdiest jock – by far – in the entire school. My super nerd friends, however, thought I was one of the coolest nerds ever. That left me with a mid-table result at best in the high school coolness competition, but since I hung out with my nerd clan most of the time, I still had a lot of fun (an early lesson that being a big fish in a small pond can be a recipe for happiness).

Who was the coolest person in my high school? It was certainly someone from the ranks of the great athletes, the gorgeous, the rich, and the super popular – probably a utility player who dominated multiple categories. The best of the best were in a fierce battle to be the coolest, and despite great efforts and desperate hopes, many people way cooler than me were still on the outside looking in.

Being the coolest person at my 50th reunion will be a very different affair, and I like my chances. I don’t think the coolest person will be the richest one – the 10th or 25th reunion was his/her day in the sun. “Best looking” will be replaced with “least ravaged by time”. Lifetime accomplishments will be attention grabbing, but I don’t know that they’ll rule the day. When life is near its end, I don’t know if having been CEO of XYZ will really impress all that much. The self-absorbed (who did quite well in high school, btw) aren’t going to be very cool, because everyone is going to want to talk about their own kids and grandkids.

What will determine coolness? Being alive will be important. There’ll be bonus points if you’re fit and healthy. Being lucid and genuinely interested in other people will count for a lot. People who have found happiness and contentment will likely be far cooler than ones who are still fighting demons and chasing the unattainable. The cool people will have led interesting lives, but they’ll be defined as much by avoiding missteps and disaster as anything else. They’ll be the winners in a quintessential Loser’s Game.

What’s a Loser’s Game?

Charles Ellis first introduced me to the concept of a “Loser’s Game” when I read his 1975 classic article by that name. It definitely warrants a read.

Ellis borrowed the term from Simon Ramo, who had distinguished between a Winner\’s Game and a Loser\’s Game in his book Extraordinary Tennis for the Ordinary Tennis Player. Ramo wrote that great tennis players are playing a Winner’s Game: the matches are determined by who plays better as two experts battle to win points. Amateur tennis players (like most of us), however, are playing a Loser’s Game: points are largely lost from low-skill mistakes, and the match is determined by who plays worse. “Professionals win points; amateurs lose points.”

Ellis extended the analogy to other endeavors (I particularly like his analysis on how airline piloting has changed games) and finally brings it to bear on investment management. He concludes that investment management is now a Loser’s Game and makes a strong argument for passive management, far before it became mainstream.

Ellis built on this article with his book Winning the Loser\’s Game. It’s a great read and I highly recommend it. Many people today blindly accept that active investment management doesn’t work for individual investors (“Warren Buffett said so…”). Ellis’ book explains why investment management is a Loser’s Game and index investing is therefore a good strategy. Passive management is not an effortless or decision-less endeavor, and I would recommend this book to anyone who wants a solid foundation of investment management principles to help manage a passive portfolio.

For me, the book’s value was more philosophical. I’m already comfortable with the arguments for
passive management and understand the limitations of active management, but as I grow older and a wee bit wiser, I find myself extending the lesson far beyond investments. I often question which of the two games I’m actually in.

At the beginning of my career, I was clearly in a Winner’s Game – outstanding performance and sharp elbows were required to succeed and advance. As I got older, I found myself in more of a Loser’s Game – avoiding mistakes became far more important because I could “win” and achieve my goals if I just avoided disaster.

Being a good parent is probably a Loser’s Game. As long as you avoid major mistakes and don’t do anything to really screw up your kids, they’ll probably be OK. Being a great parent is a Winner’s Game, though, and thinking through my strategies for both games has made me a better father.

Win the Game You’re In

A Winner’s Game demands a very different approach from a Loser’s Game, and analyzing which game I’m in and recognizing when the game can change have proved extremely valuable throughout my life. In your investments, your career, your relationships, and your life itself, I’d encourage you to do the same.

Being the coolest kid in high school was clearly a Winner’s Game that I lost handily 🙂 I may not make it to my 50th high school reunion to see “Who’s coolest, now?” but if I do, I’m planning on winning that Loser’s Game!


9 thoughts on “Win the Game You\’re In”

  1. Another fantastic post, Paul.

    I’d heard the stat about amateur tennis games being won on mistakes. (Naturally I came across it the same way everyone does… while trying to figure out how to become a better amatuer ping pong player. Haha!) But I didn’t realize the source, and I hadn’t connected the dots to all the other aspects of life it applies to.

    Fascinating, and I think you just hit me with the epiphany that my career just shifted from a loser’s game to a winner’s game. At least temporarily.

    I feel like you just gave me a cheat code to live.

    1. Many thanks MW. The Winner’s Game / Loser’s Game dynamic is a really interesting framework to think through many of life’s “contests” – it seems like its value continues to expand as I get older. It’s often hard to check our natural impulses (like trying to make an ESPN highlight reel with our winning tennis shots, rather than just putting the ball in play and letting our opponent make mistakes), and just recognizing we’re in a Loser’s Game can help a lot.

      I like the sound of your career turn – time to turn on the Rocky music it seems! Good luck, and keep an eye out for when the game shifts again.

      Thanks for the note

  2. In a recent post of mine, Paul lamented not being able to recommend me any good books. I barely forgave him for this transgression because I am a terrible person.

    Besides, it looks like he’s been holding out on me! This book he talks about sounds super interesting. I’m pretty sure I subconsciously adopted such an approach a few years ago without even realizing it. Blog post upcoming.

    Once again, Paul delivers. Nice post.

    1. I actually have you to thank for the post – I was feeling sad that all I could recommend was young adult literature and books about Donald Trump, and I remembered this book and was inspired. I had already started drafting this post (if, by “drafting”, we mean, “written the first sentence”) long ago, so I dusted it off just for Nelly.

      But as a sign of how I truly take blogging to the next level, I had checked out the e-book and was going to read it again (it’s been 20 years and I remember liking it a lot but wasn’t sure how basic it was) to make sure I wasn’t recommending a layperson-friendly book to someone of Nelly’s skills and powers. Since it’s a quick read, you may finish before I can even confirm my review, but so far it does have broad appeal to both newbie and expert, so I think it’s Nelly-friendly. Curious to hear your review.

      And once I get you hooked on fiction, the floodgates of awesome recommendations will be open and you will have a richer and more wonderful life!

  3. Why is it that the jocks are considered “cool”. I never understood that. Being smart and a good person always seemed way cooler to me.

    Since athletic ability really peters out after our 30’s, trying to maintain athletic ability might be something of a Losers game as well.

    Great post btw!

    1. I think jocks being cool is just the short-sighted, Lord of the Flies – style environment that is high school. Putting great athletes on a pedestal probably made sense when we were cavemen, and we’re still working our way out of it. Another 10 or 20 thousand years and being smart and nice will rule the day 🙂

      Athletics in your 30’s and 40’s is absolutely a Loser’s Game – when I was playing soccer regularly with old guys, my single goal was to avoid injury while getting a little exercise. Too bad many of my competitors didn’t get the memo and were trying to re-live high school glory days!

      Thanks for the note!

  4. I like the dual sided approach here – the analogy with parenting made it hit home to me. What did I do there that was losing the least points versus trying to win some… at any rate that time has passed! I do see how you could apply that strategy to so many things. Even healthy eating – making positive additions to your diet versus not eating the fifth donut. Thanks for the food for thought.

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