Every Shot Must Have a Purpose

5+   PDF Download (Paid Subscription Required):  Every Shot Must Have a Purpose
You have reached the maximum number of free, long-form articles for the month.

Please join here to read the rest of this content.

Paid Members can log in here.
Notify of
12 Comments
oldest
newest
Inline Feedbacks
View all comments
Sean Garman
Sean Garman
1 year ago

I really love this post because sports like golf, baseball and cricket are so very applicable to the game of investing and life. All three sports are essentially static: i.e. the person with the ball at any one time and their psychology and mindset have a disproportionate impact on any outcome.

In baseball and cricket, although team sports, no one can help the pitcher or bowler when they are about to throw or bowl the ball to the batter/batsman. Similarly, for someone playing golf, no amount high-fives and encouraging words makes up for the fact that *you* and only you are responsible for what happens next.

The mental and psychological aspects of these games needs to be studied more in the context of investor psychology and performance.

Demonetized
Demonetized
1 year ago
Reply to  Sean Garman

Thanks Sean! There is a great post from Graham Duncan that touches on many areas of this: https://medium.com/@graham.duncan/the-playing-field-dfb9a1473f43. Definitely worth reading if you haven’t seen it before.

His comments on tempo in particular have resonated with me since I first read this piece. And they’re directly applicable to this idea of “shot commitment”:

“An investor’s relationship to time also influences how he or she views periods of recovery or quiet. Good investment management comes from a mindset reflecting the assumption that the manager will be investing for decades, but that investment activity is as a series of sprints and recoveries rather than one extended marathon. As Lenin once said: “There are decades where nothing happens; and there are weeks where decades happen.” The tempo of a strong investment culture is in sync with the reality of long periods of inactivity. There is often a shared mood that the game is afoot, but not a rushed feeling to do something based on fear or greed. Then, when the moment is right, top investors are startlingly aggressive.”

Sean Garman
Sean Garman
1 year ago
Reply to  Demonetized

Thanks for the reply. Having time in order to move is where everyone wants to get to, the problem for those managing other people’s money (particularly with institutional money) are that the demands for returns forces people to take more shots. Patience is too often punished, so they swing and miss and for those not used to missing those shots, they get even more desperate.

Shawn
Shawn
1 year ago

you nailed it when you said this can be fiendishly difficult. in the alpha generation bucket, how do you encourage an uncorrelated portfolio of trades to capture diversified risk premia when it is concentration which moves the needle? Some of it is certainly “commit to the shot”. “This is our diversification/concentration strategy, we’re sticking to it because it is what we believe”.

Shawn
Shawn
1 year ago

p.s. can i get a pdf of this to share? not seeing the link.

Demonetized
Demonetized
1 year ago
Reply to  Shawn

Gotta defer to Ben and Rusty on the technical question (I am wondering if the button only appears for the long form notes?). But thanks very much in advance for sharing!

Rusty Guinn
1 year ago
Reply to  Demonetized

We will get a PDF put together to make it easy to share! We usually do it just on long-form but happy to do it here, too!

Harper Hunt
1 year ago
Reply to  Shawn

A PDF link has been added to the note! You should be able to find it at the top and bottom of the text.

Victor K
Victor K
1 year ago

More ridiculous than a 20 trying to play like a 5 is a 3 acting like he is good at golf, the result of a brilliant industry (raccoons in the vernacular).
Great post!

cartoox
cartoox
1 year ago

Reminds me of something I read from an analysis of Clausewitz…..
What are the characteristics of a great General [player] ?
Clausewitz suggested two.
“The first was intuitive, the quality labeled by the French coup d’oeil: the almost instinctive capacity to discern through the fog of war what was happening and what needed to be done; a flair for essentials that enabled the commander to select the right course almost without thinking, and certainly without going through the elaborate process of calculations of possibilities and probabilities that would paralyze the decisions of a lesser man
The second requisite, said Clausewitz, was the capacity, having taken a decision, to stick to it: determination. Everything would conspire to convince the general that his decision had been wrong.

Demonetized
Demonetized
1 year ago
Reply to  cartoox

This reminded me I have been meaning to revisit Clausewitz…

Peter
Peter
1 year ago

Love this post re deck chairs on the Titanic. Why? In my view asset allocation and efficient frontier are pure hokum that will be fully exposed finally as fraudulent in the fullness of time…next asset crash. Think 2008 Super-sized (08 everything down and in nearly equal measure except gold, cash, and Tsys). Gotta start thinking outside the box. Diversify among risk, non-risk, and anti-risk assets.

The Latest From Epsilon Theory

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.

Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.