Winners and Losers

Can we improve our investments by thinking backwards?

Investing has been called a loser’s game. A loser’s game is one where winners simply outlast their opponents by minimizing stupid mistakes. In tennis, it’s avoiding the unforced error. In golf, it’s keeping the ball on the fairway and staying out of the bunker. And with investing its staying away from the Lehmans and Madoffs of the market.

Investing legend Charlie Munger understands this when he says that many hard problems are best solved when addressed backwards. An example from everyday life might be parenting. Raising children is incredibly complex, but thinking backwards helps. Imagine all the things that a bad parent would do–losing your temper, yelling, acting arbitrary—and shun these. If you want to foster innovation on the job, think of what would stifle new ideas and stop doing that.

Thinking forwards and backwards works because every avoided Enron adds to performance. And it’s a lot easier to avoid stupidity than to find brilliance.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2013-10-29T09:49:46+00:00 October 29th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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