Play your own game

I recently read Morgan Housel's short and insightful article titled Play your own game. I think this article is a must read for all investment professionals and asset allocators.

Every trade has a counter-party and consequently involves an implicit declaration: "I'm right you're wrong." This declaration of one's superior insight is frequently stretched beyond individual decisions to encompass investment strategies. Deep value investors might shit on quality growth ones and vice versa. 

Such arrogance pervades through investment business. This is wrong.

Housel explains that just as athletes competing in different sports must train differently, equally smart and talented people invest very differently depending on what game they’re playing. His key messages are:

1. Judge less.

At least half the people doing things with money that you disagree with are playing a different game than you are. You probably look just as crazy in their eyes. 

2. Figure out what game you’re playing, then play it (and only it).

So few investors do this. Maybe they have a vague idea of their game, but they haven’t clearly defined it. And when they don’t know what game they’re playing, they’re at risk of taking their cues and advice from people playing different games, which can lead to risks they didn’t intend and outcomes they didn’t imagine. 

“That’s how I played the game,” Jordan said. “If you don’t want to play that way, don’t play that way.”