Charley Ellis has been a voice of common sense in the world of investing for more than 50 years. His book, Winning the Loser’s Game, which explains why low-cost, buy-and-hold indexing is the rational choice for all investors, has become a classic. He’s now aged 85 but still working.
To read more and listen to his interview, see here.
This will get you thinking…
1. Success is all about minimising mistakes
“A loser’s game is any competitive activity, where the outcome is not controlled by the winner, but it’s actually controlled by the loser. Golf is a good example. People that are really good at golf will shoot less than par, by two or three strokes on a regular basis. A lot of other people are proud to be able to shoot 90. There are some people who’ve never broken a 100. Well, the difference between the two groups is the mistakes of the people who’ve never broken a 100 and make all the time.
“Another loser’s game is tennis. If you look at your game, or at least my game, how many times do you win a stroke, instead of hitting it at the net, hitting it out of bounds, laying it up so easily for the other person hit it back, that you’ve essentially forced yourself into a loss? If you could cut back on the number of mistakes and let the other guy increased the number of mistakes he made, you’ll come out the winner of a loser’s game.
“That’s what investing is all about. Most of the activity that most of us spend our time engaged in, in investing actually doesn’t help. It actually does harm. Our long-term results are impoverished by the mistakes that we’ve made along the way.
“In investment management, if you could just reduce the number of mistakes you’ve made, you would come out as a winner. The easy summary of all that is, if you index, you won’t be making any mistakes. You have to choose the right index, that’s fair. If you index, you won’t be timing the market, you won’t be trading too much, you will get excited about something you just heard from a friend of yours who heard from a friend of his that looks like it might be a really great idea.”
See more here