Playing Games
Shall We Play a Game?
I waste time. You know that I consider time more precious than money, but I am human. I will waste time.
There's really only one game that I play, but it supplants all others, and does so for hours: Civilization. It is a wonderfully complex game that starts with villagers in a patch of wilderness. A civilization wins by working their way out of the stone age and into the space age. I love the interconnectivities of science, culture, and exploration. I also like it because it is possible to win without ever going to war.
The investing world is also full of interconnectivities and power struggles. It also possible to "win" without aggression. Within investing it is also possible, and quite common, to "win" without coming in first.
Unfortunately, some treat the investing world as a game. I don't mind as long as they play within the rules. There are too many though that will strive to win any way possible. That's one reason we have a government, so the rest of us can be protected and the criminals can be caught and prosecuted.
The sad fact, which cynically comes as no surprise, is that it is impossible to catch all of the crooks. Some are traders, some are pundits, some are in management.
The game I play costs me time. (On a dollar per minute basis it is a very good deal.) The games that are played in the market affect investors, companies, employees, and possibly critically ill people. Two cautionary tales are Overstock.com and Dendreon. For now, they are cautionary instead of criminal because people are innocent until proven guilty; but a court needs proof beyond a reasonable doubt for a crime, an investor merely needs to know enough to understand if it looks like everyone is playing fair.
I've been asked, "How can you invest when you know these things are going on?" I invest because I understand the risks. I also have an appreciation of the rewards. In my book I use the analogy of the pioneers crossing the frontier of the American West. They knew there were dangers and risks. Some were natural. Some were other humans. But they also knew the potential rewards.
Most people unconsciously balance risk and reward daily. The risk of a car accident is balanced against the reward of being able to live someplace besides at work. Smoking, eating, playing, all carry those balancing acts. Not everyone says yes to such choices. Some people won't smoke. Some people restrict their diets. Some people won't play on skis. Some people won't own a car. Some people shouldn't handle their own investments.
If you have the time, and especially if you have the stocks, it is prudent to understand the back stories, the players, that orbit stocks; especially, if a controversy has grown to such documented proportions as in OSTK and DNDN. Most stocks I track have some story that scares off investors. Upon quick consideration, I just realized that I can't think of any stock that is unblemished. Just like people, no company is perfect. It is up to the individual investor to decide if the blemishes are too unattractive, or if they can be overlooked in light of a greater potential. Are the imperfections part of normal life, or are games being played by people who are ignoring the rules?
In the meantime, I'm going to get back to my game. I'm winning, so far.
Wednesday, July 22, 2009