Simon Ramo, a scientist and statistician, wrote a fascinating little book that few people have bothered to read: Extraordinary Tennis Ordinary Players.
The book isn’t fascinating because I love tennis. I don’t. In the book Ramo identifies the crucial difference between a Winner’s Game and a Loser’s Game.
Ramo believed that tennis could be subdivided into two games: the professionals and the rest of us.
Players in both games play by the same rules and scoring. They play on the same court. Sometimes they share the same equipment. In short the basic elements of the game are the same. Sometimes amateurs believe they are professionals but professionals never believe they are amateurs. But the games are fundamentally different, which is Ramo’s key insight.
Professionals win points whereas amateurs lose them. Think about professional games. Each player, nearly equal in skill, plays a nearly perfect game rallying back and forth until one player hits the ball just beyond the reach of his opponent. This is about positioning, control, spin. It’s a game of inches and sometimes centimeters.
In his 1975 essay, The Loser’s Game, Charles Ellis calls professional tennis a “Winner’s Game.” While there is some degree of skill and luck involved, the game is generally determined by the actions of the winner.
Amateur tennis is an entirely different game. Not in how it is played but in how it’s won. Long and powerful rallies are generally a thing of the past. Mistakes are frequent. Balls are constantly hit into nets or out of bounds. Double faults are nearly as common as faults.
The amateur duffer seldom beats his opponent, but he beats himself all the time. The victor in this game of tennis gets a higher score than the opponent, but he gets that higher score because his opponent is losing even more points.
Ramo found this out because he gave up trying to keep track of conventional scores — “Love,” “Fifteen All,” etc. Instead he simply looked at points won versus points lost.
In expert tennis, about 80 per cent of the points are won; in amateur tennis, about 80 per cent of the points are lost. In other words, professional tennis is a Winner’s Game – the final outcome is determined by the activities of the winner – and amateur tennis is a Loser’s Game – the final outcome is determined by the activities of the loser. The two games are, in their fundamental characteristic, not at all the same. They are opposites.
After discovering that there are, in effect, two different games and realizing that a generic strategy will not work for both games he devised a clever strategy by which ordinary players can win by losing less and letting the opponent defeat themselves.
… if you choose to win at tennis – as opposed to having a good time – the strategy for winning is to avoid mistakes. The way to avoid mistakes is to be conservative and keep the ball in play, letting the other fellow have plenty of room in which to blunder his way to defeat, because he, being an amateur will play a losing game and not know it.
An Investor Bets on Someone Else’s Game
This brings to memory something about Warren Buffett and Ben Graham. Buffett used to convene a group of people called the “Buffett Group.” At one such meeting Benjamin Graham, Warren Buffett’s mentor and teacher, gave them all a quiz. I spent hours searching for this reference, which comes from Benjamin Graham on Value Investing: Lessons from the Dean of Wall Street.
“He gave us a quiz,” Buffett said, “A true-false quiz. And there were all these guys who were very smart. He told us ahead of time that half were true and half were false. There were 20 questions. Most of us got less than 10 right. If we’d marked every one true or every one false, we would have gotten 10 right.”
Graham made up the deceptively simple historical puzzler himself, Buffett explained. “It was to illustrate a point, that the smart fellow kind of rigs the game. It was 1968, when all this phony accounting was going on. You’d think you could profit from it by riding along on the coattails, but (the quiz) was to illustrate that if you tried to play the other guy’s game, it was not easy to do.
“Roy Tolles got the highest score, I remember that,” Buffett chuckled. “We had a great time. We decided to keep doing it.”
The point, if I have one, is that most of us are amateurs but we refuse to believe it.
This is a problem because we’re often playing the game of the professionals. What we should do in this case, when we’re the amateur, is play not to lose.
This was a point Charlie Munger, the billionaire business partner of Warren Buffett, made a long time ago.
In a letter to Wesco Shareholders, where he was at the time Chairman (and found in the excellent Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger), Munger writes:
“Wesco continues to try more to profit from always remembering the obvious than from grasping the esoteric. … It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent. There must be some wisdom in the folk saying, `It’s the strong swimmers who drown.’”
And there is so much wisdom embedded in that quote that I’ve attached it to my wall.