The Long-Term Advantage Of Trying To Be Not Stupid - Deepstash

The Long-Term Advantage Of Trying To Be Not Stupid

This above was a point Charlie Munger, the billionaire business partner of Warren Buffett made a long time ago.

In a letter to Wesco Shareholders, where he was at the time Chairman, Munger writes:

“Wesco continues to try more to profit from always remembering the obvious than from grasping the esoteric… It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent. There must be some wisdom in the folk saying, ‘It’s the strong swimmers who drown.’”

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It’s the strong swimmers who drown.

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MORE IDEAS FROM Avoiding Stupidity is Easier than Seeking Brilliance

Amateur tennis is an entirely different game. Not in how it is played or the rules but, rather, in how it’s won. Long and powerful rallies are generally a thing of the past. Mistakes are frequent. Balls are constantly hit into nets or out of bounds. Double faults are nearly as common as faults.

The amateur duffer seldom beats his opponent, but he beats himself all the time. The victor in this game of tennis gets a higher score than the opponent, but he gets that higher score because his opponent is losing even more points.

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In expert tennis, about 80% of the points are won; in amateur tennis, about 80% of the points are lost. In other words, professional tennis is a Winner’s Game – the final outcome is determined by the activities of the winner – and amateur tennis is a Loser’s Game – the final outcome is determined by the activities of the loser. The two games are, in their fundamental characteristic, not at all the same. They are opposites.

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Scientist and statistician Simon Ramo wrote a fascinating little book that few people have ever bothered to read: Extraordinary Tennis Ordinary Players. The book isn't about tennis: it is about the crucial difference between the Winner’s Game and a Loser’s Game.

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After discovering that there are, in effect, two different games and realizing that a generic strategy will not work for both games, Ramo devised a clever strategy by which ordinary players can win by losing less and letting the opponent defeat themselves.

If you choose to win at tennis – as opposed to having a good time – the strategy for winning is to avoid mistakes. The way to avoid mistakes is to be conservative and keep the ball in play, letting the other fellow have plenty of room in which to blunder his way to defeat, because he, being an amateur will play a losing game and not know it.

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In his 1975 essay, The Loser’s Game, Charles Ellis calls professional tennis a “Winner’s Game.” While there is some degree of skill and luck involved, the game is generally determined by the actions of the winner.

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Buffett used to convene a group of people called the “Buffett Group.” At one such meeting Benjamin Graham, Buffett’s mentor, gave them all a quiz.

“It was a true-false quiz,” Buffett said. “And there were all these guys who were very smart. He told us ahead of time that half were true and half were false. There were 20 questions. Most of us got less than 10 right. If we’d marked every one true or every one false, we would have gotten 10 right.”

Graham made up the deceptively simple historical puzzler himself. “It was to illustrate a point, that the smart fellow kind of rigs the game”.

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The point is that most of us are amateurs but we refuse to believe it.

This is a problem because we’re often playing the game of the professionals. What we should do in this case, when we’re the amateur, is to invert the problem. Rather than trying to win, we should avoid losing.

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Professionals win points whereas amateurs lose them.

In a professional game, each player, nearly equal in skill, plays a nearly perfect game rallying back and forth until one player hits the ball just beyond the reach of his opponent. This is about positioning, control, spin. It’s a game of inches and sometimes centimeters. This is not how amateurs play.

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Ramo believed that tennis could be subdivided into two games: the professionals and the rest of us.

The game looks the same from the outside. After all, players play by the same rules and scoring. And they play on the same court. Sometimes they even share the same equipment. In short, the essential elements of the game are the same.

Sometimes amateurs believe they are professionals, but professionals never believe they are amateurs. Professionals know they are not playing the same game as amateurs.

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RELATED IDEA

You're Responsible For The Outcome

When you play tennis, you're really competing with yourself. You're perpetually trying to improve: to hit shots faster, improve placement, surprise your opponent, make your footwork more efficient than it was the last point. 

If you try to blame others, like the coach, the opponent, the referee, etc., you're only hurting your game by not accepting your role in the outcome.

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Circle of competence

If you want to improve your odds of success in life and business then define the perimeter of your circle of competence, and operate inside. 

The concept has been used by Warren Buffett and relates to the importance of  honestly definining what we do know and to stick to those areas. 

The circle can be widened, but only slowly and over time. 

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