"Getting rich slowly in
the markets is simple. (...)
I said it’s simple, not easy. Winning the gold medal in the 100 meters or the marathon is simple: Just run faster than everyone else. In hindsight, superior investing strategies look simple. But they require preparation, discipline, and the ability to suffer pain in the short run. In fact, they work well in the long run precisely because they can hurt a great deal in the short run, so they are very hard to apply consistently.
I’m going to talk about poker as an analogy for risk in the market and about “good” risks versus “bad” risks.
Poker is a perfect laboratory of human risk taking. It teaches many lessons directly applicable to investing. Both are games of analysis and decision making under uncertainty, psychology and human emotion, and “luck,” which in the long run is variance — the winding road to the inevitable fate your skill, preparation, and mental toughness, or lack thereof, have destined you to."
I said it’s simple, not easy. Winning the gold medal in the 100 meters or the marathon is simple: Just run faster than everyone else. In hindsight, superior investing strategies look simple. But they require preparation, discipline, and the ability to suffer pain in the short run. In fact, they work well in the long run precisely because they can hurt a great deal in the short run, so they are very hard to apply consistently.
I’m going to talk about poker as an analogy for risk in the market and about “good” risks versus “bad” risks.
Poker is a perfect laboratory of human risk taking. It teaches many lessons directly applicable to investing. Both are games of analysis and decision making under uncertainty, psychology and human emotion, and “luck,” which in the long run is variance — the winding road to the inevitable fate your skill, preparation, and mental toughness, or lack thereof, have destined you to."
