Winning the Wrong Game
It had been many years since I was last in Atlantic City.
My weekend in the salutatorian of American gambling cities resulted in zero placed bets.
Maybe said another way: my money was mostly spent on alcohol and the occasional portion of food.
Of course, skill or strategy is involved in some table games, but the artificial lights and looping chimes will mislead you on the statistics.
From the script of Molly’s Game (2017):
“I liked Harlan. There was no affectation, no Hollywooding, no flossing — he wasn’t ticking off the menu items to show off…
But nobody else liked him except Player X. He played tight, didn’t give a lot of action and always got his money in good, which means he was running the odds. In other words, he was playing poker and the others were gambling.”
There is another trite but true line said in Rounders (1998), which even a novice poker player tells him or herself:
“If you can’t spot the sucker in your first half hour at the table, then you are the sucker.”
I don’t care why the stock market takes a tumble every so often.
Maybe, from an American perspective, the answer is tariffs or antitrust investigations or both:
“In recent days, the Trump administration has signaled that it, too, has set its sights on Silicon Valley, taking early steps to divvy up future competition oversight of Amazon, Apple, Facebook, and Google. The efforts by the U.S. government’s two antitrust enforcement agencies, the Federal Trade Commission and the Department of Justice, could pave the way for more formal probes of each company’s practices, though the agencies’ exact interests aren’t known.”
But whether shots fired come from an enemy abroad or are self-inflicted, the general rule is to stay focused on the long-term:
One of everyone’s favorite survivorship bias examples to cite these days is Amazon ($AMZN):
“Look, too, at the market capitalization of Amazon prior to that 95 percent collapse. Anyone would love to travel back in time to buy Amazon at a mere $19 billion valuation and watch that multiply 47 times to $894.2 billion. My back-of-the-envelope calculations suggest Amazon has risen 4,606% since Barron’s published its column, with an annualized average return of 21.1% — about quadruple what the S&P 500 returned over the same period.
Not too shabby.
But there is yet another historical lesson here. Anytime some company is said to be ‘the next Amazon’ (or Apple or Microsoft), keep in mind that most people would be unable to withstand the sort of pain and wealth destruction that goes along with investing early, even if the ups and downs are temporary. Only if investors can withstand the subsequent drawdowns — in Amazon’s case, 83% in 2000; 73% in 2001; 41% in 2004; 46% in 2006; 64% in 2008 — will they be amply rewarded.”
For now, count me in Fred Wilson’s corner on how we may want to deal with big tech:
“If we made it easier and reliable for others to innovate on top of the core search engine, then there might be many more options in search.
In mobile, a good first step is to open up the app stores and allow the browsers to have the same access to the operating system as native mobile apps.
In commerce, if I could check out as easily everywhere as easily as I can on Amazon, there would be more competition for my shopping dollars.
I think you get the idea. It is very true that the big Internet services have built centralized monopolies and have consolidated their market positions. We do need more competition in these core services. And the best way to do that is to force them to open up their services, not break them up.”
We may each form different opinions on how the future will pan out, but even those of us who end up correct will be luckier than anything else:
“Good forecasters didn’t dig in when mistaken. They utilized bad predictions as learning processes. The opposite of narrowly framed experts.
Next time you hear a financial pundit predicting a market crash, depression, or impending armageddon because of some temporary event that’s commonplace in history, take a thoughtful pause.
There’s one constant in the prediction business — they’re almost always wrong.”
The universe will continue to expand whether or not you make an investment on any given day:
“But good investment ideas don’t care that you need to discover one of them by the next solar rotation. They’ll come when they’re ready, on their terms, not yours.
Good ideas are sporadic. They can’t be scheduled. That’s true whether we’re talking about good investing ideas or good marketing ideas or good product ideas. Remembering that you care about your deadline but the rest of the world doesn’t even know about it is an important part of setting expectations.”
This morning, Shane Parrish blogged an important reminder suited for any start to a Monday:
“The most important things in life are measured internally. Thinking about what matters to you is hard. Playing to someone else’s scoreboard is easy, that’s why a lot of people do it. But winning the wrong game is pointless and empty. You get one life. Play your own game.”
Personally, I would love to see shares in DocuSign ($DOCU) fall to $50, Lululemon ($LULU) fall to $150, Okta ($OKTA) fall to $90, Splunk ($SPLK) fall to $95, and Zendesk ($ZEN) fall to $75.
But that’s my own game.
