There are a lot of terrific pool players in the world, however, I am not one of them and likely never will be for that matter. Yet, despite my inordinate lack of skill, I developed the perfect strategy that has enabled me to consistently beat all of my friends, who are also terrible pool players. You probably don’t care how I have done this, but I’m going to tell you anyway. My strategy stems from two observations I made:
1. The only sure-fire way to lose in pool is to sink the 8-ball prematurely.
2. The only skill that my friends and I exhibited, with regard to pool, was our ability to consistently sink the 8-ball prematurely.
I realized all I had to do to beat my friends was avoid sinking the 8-ball prematurely and, more or less, stand in the vicinity of the pool table, hold a pool cue and watch until my opponent sunk the 8-ball themselves. I began to do just this and, seemingly overnight, I began winning game after game. Did I ever truly beat an opponent in the sense that I outplayed them? Probably not, but my win/loss record showed substantially more wins than losses and that’s all that really matters.
The reason I have told this story is because investing is very similar to my anti-climactic, hypothetical pool career. Similar to my friends who actually genuinely tried to win pool games, many investors continually chase exponential growth and are willing to continually lose money in the short term in hopes that, at some point, one of their investments will take off. What these investors are failing to realize is that while they continue to wait on a few specific investments they are missing out on broad market growth. To add salt to the wound, while they miss out on this growth there is somebody putting in none of the effort they are (insert me holding a pool cue) who is continually benefiting from their losses and steadily making money.
To wrap up, alike to a pool game played by awful pool players, investing is a loser’s game in the sense that to “win” you don’t need to outperform other investors, you simply need to make less mistakes than them.