John Carey, Portfolio Manager
November 22, 2019
Dr. Charles Ellis, authored “Winning The Loser’s Game” in 1998 and we believe it should be required reading for any investor looking for long-term market gains. The book, which has been updated 6 times since its initial publication, describes the dynamics of investing and how they’ve changed over the past 50 years as a result of the technological advancements to which today’s investor has access. It was relatively easy to beat the market in the 1970’s and 1980’s if you were willing to do your research. However, in today’s highly quantitative and tech savvy environment, professional investors make up 90% of the market – it is impossible for all of them to win. In order to be successful over the long-term, Ellis argues, investors must win at the loser’s game.
Ellis likens the “loser’s game” to a game of amateur tennis. In tennis, the winner is generally the one who makes the fewest mistakes. And, if you can consistently keep the ball in play, eventually the opposition will make a mistake that costs them the point. Players that try to crush every shot as the professionals do, are more apt to make big mistakes that will cost them the match. Additionally, Ellis describes some of the biggest mistakes amateur investors make when trying to beat the market including being overly emotional, impatient, trade happy, and optimistic.
At Griffin, we endorse a similar philosophy to Ellis’ winning tennis strategy. We win on behalf of our clients by conducting tireless research, removing emotion from the equation, and making consistent, steady shots over the long-term. We highly recommend Ellis’ book to any investor looking to capture long-term gains in the market.