Why Warren Buffett Sees Investing as a Loser’s Game
Inversion is a powerful tool for decision-makers
My favorite fable as a child was Aesop’s “The Tortoise and the Hare,” about the famous race between a fast, arrogant rabbit and his much slower, shelled counterpart. After gaining a sizable lead, the hare decides to take a nap during the race, believing his victory is all but assured, until the hare wakes to find that the tortoise has passed him. Despite making a mad dash toward the finish line, the hare comes up short and loses the race.
While most people see the moral of the story as “don’t be overconfident” or “slow and steady wins the race,” I see it as a warning against terrible decision-making. After all, it is the hare’s bad decisions, not the tortoise’s good decisions, that lead to the hare’s defeat.
Warren Buffett said it best: “Over the years, a number of very smart people have learned the hard way that a long string of impressive numbers multiplied by a single zero always equals zero.”
Investment consultant Charles Ellis applies this framework in his book Winning the Loser’s Game:
In a winner’s game, the outcome is determined by the correct…
