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!