I remember a comedian used to say: "When I came out of a casino with $1 in my pocket, I felt like I survived the casino!"
While we can laugh at him, but what he said is somewhat true.
In a casino, when all the odds are against you, not losing "too much" should be considered as winning.
In a sense, the stock market is similar to the casino, but...
Hear me out!
"Stock trading in its essence is a loser's game. "
-Howard Marks
Well, what does he mean by that?
He meant...
"Not losing is winning."
One of the best example from Howard Marks is how professional tennis players plays a "Winner's game" where they perform difficult moves and creative strategy to outsmart other players to win the tournament.
While in an amateur's tennis game, a player should try to avoid difficult moves, and make less mistakes in order to win the tournament. This is a "Loser's game."
A Loser's game means error / mistakes avoidance.
Focus on survival instead of beating the competition.
Avoid risks, and aim for long term.
When I first begin trading, I look for the best strategy to beat the market!
The Silver bullet!
My mentor love to point out, as a beginner, it is good enough that I survive the market.
But, I am here to learn how to make money, my money can survive well in the bank. I don't need to put my money in the stock market if I just want it to survive. I thought...
He then said "Survival is strength in itself." noticing my dissatisfied look.
"You looked like you don't understand anything I said." he stares at my blank face.
"You said you're good at math, do the following calculation for me."
"I never said I am good at math, not all Asians are good at math... and I suck at it." I mumbled quietly...
"What is 2x2x2x2?" He shoots the question.
"Well, 16...." I said 5 seconds later...(which is quite stupid by Asian standard)
"What is 2x2x2x2x0?" He shoots the next question.
"0"... I answered in 2 seconds... which is also slow...
"Do you understand what I mean now?" He stares...
"WTF did I just hear? What am I supposed to understand with that?" my mind screams...
His eyes literally rolled over to his foe head and down to the back of his neck...
"You can multiply your money as many times as you want, all you need to do is to fuck-up once... it turns into 0..."
That was my aha-moment...
All I have thought about was how to make money... never thought about how to keep it.
"I never thought about it that way." I mumbled...
He continued his stump on my intelligence..."Stock trading should be defensive, and focus on risk avoidance and long term survival. When you survived long enough, you don't have to seek profit, profit will look for you..."
"I taught you so much shit, and I didn't even get some tea for all these efforts." as he coughs with a dry throat...
After I brew some tea and handed to him, I continued to pick his brain for knowledge.(it's difficult to get him into a teaching mood)
"Tell me more about investing." I inquired
"Investing is anti-human nature, the more you understand about investing, your understanding of humanity will increase as well." He said. after he sips the hot tea...
"Investing is the avoidance of greed, and fear. The very things that humans struggles with. When you are no longer holds greed and fear, you'll ascend to the next level in investing, as well as in the mental realm...Investing should be fundamental, and simple...yada, yada, yada..."
Anyway, I lost him after mental realm...as my consciousness blocks me from anymore of his philosophical torture...
Basically, he meant that when I understand humanity and human tendencies, I'll be a better trader...
I wonder, if that's all he meant...