Earlier this year on the Good Investing Talks Podcast, Tom Gayner explained why successful investing is not about the win, win, win, and more about not losing. Here’s an excerpt from the interview:
We all want to be the best. But there’s a really bizarre thing in the world of investing that to be among the very best and to not necessarily think that you would be the best in the world, but really, really, really, really good at what you do, to adopt that mindset of a little more calmness and just trying to be good and hit the ball back over the net, rather than trying to get the win.
That, in and of itself can produce better returns and they can be more durable returns because they have less risk of having something traumatic or really bad happen. And they can be more scalable because the ideas can apply to more capital over more time.
So I’m really trying to win the loser’s game as Charlie Ellis would talk about. And so, I completely acknowledge that there are a lot of people in the investment world who are smarter and better than me, and they talk about using their advantage and to use their intelligence and their skills to really see that pay off.
They want a smaller number of names in their portfolio. They want a 20 stock portfolio or a 10 stock portfolio, or boy if you were really smart and you knew you would have a one-stock portfolio buy the one that’s going to go up the most. Why don’t you, why don’t people do that? Well, because you know, in your heart of hearts really should but you’re not that smart.
Now I’m going to accept the fact. There are a lot of people who are smarter than me, so they could have a 10 stock portfolio or 12 stock portfolio, or even a 20 stock portfolio. I think A) I’m not that smart and B) within the context of being a steward who’s responsible for the assets of an insurance company, and to make sure that we’re always there to honor the claims that policyholders will have, it is appropriate to dial back that degree of ferociousness or intensity. And trying to win, win, win, win, win, and play a game of, to some degree, not lose it.
You can read the entire transcript here:
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