{"id":797,"date":"2020-02-23T15:07:19","date_gmt":"2020-02-23T15:07:19","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=797"},"modified":"2020-02-23T15:07:19","modified_gmt":"2020-02-23T15:07:19","slug":"avoiding-bad-decisions-is-more-important-than-making-great-decisions","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2020\/02\/23\/avoiding-bad-decisions-is-more-important-than-making-great-decisions\/","title":{"rendered":"Avoiding Bad Decisions is More Important than Making Great Decisions"},"content":{"rendered":"<p><a href=\"https:\/\/ofdollarsanddata.com\/author\/nick\/\">Nick Maggiulli<\/a> writes on his blog about \u201c<a href=\"https:\/\/amzn.to\/2NVXeM7\">Winning the Loser\u2019s Game<\/a>\u201d a book written by Charles Ellis.\u00a0 In the book, Ellis describes what he calls \u201cwinners\u2019 games\u201d and \u201closers\u2019 games\u201d: In a winner\u2019s game, the outcome is determined by the correct actions of the\u00a0<em>winner<\/em>.\u00a0 In a loser\u2019s game, the outcome is determined by the mistakes made by the <em>loser<\/em>. Ellis then goes on to explain that investing is a loser\u2019s game because most investors who attempt to beat the market (i.e. those who try to win) typically underperform in the long run.\u00a0 For example, <a href=\"https:\/\/ofdollarsanddata.com\/borrow-if-you-dare\/\">using excessive leverage<\/a>\u00a0or paying high fees for\u00a0<em>expected<\/em>\u00a0outperformance are two common ways in which would-be winners become definite losers.<\/p>\n<p>The better strategy for investors then is not to try and win, but to\u00a0<em>not lose<\/em>.\u00a0 Too many people in the financial community obsess over the \u201coptimal\u201d way to invest when their time would be better spent steering clear of actions that could lead to ruin. Warren Buffett said it best in his\u00a0<a href=\"https:\/\/www.berkshirehathaway.com\/letters\/2005ltr.pdf\">2005 Berkshire Hathaway letter to shareholders<\/a>: 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.<\/p>\n<p>The warning from Ellis and Buffett alike is crystal clear:\u00a0<strong>avoid the zeros.<\/strong>\u00a0 Avoid them at all costs.\u00a0Why?\u00a0 Because the zeros are those things that can set you back years or decades in an instant.\u00a0 What are \u201cthe zeros\u201d exactly? In the investment world, the zeros are usually things associated with high costs (i.e.\u00a0<a href=\"https:\/\/ofdollarsanddata.com\/how-hedge-funds-get-rich\/\">fees<\/a>, taxes,\u00a0<a href=\"https:\/\/ofdollarsanddata.com\/the-best-way-to-lose-5-billion-dollars\/\">extravagant spending<\/a>, etc.) or high risks (i.e.\u00a0<a href=\"https:\/\/ofdollarsanddata.com\/borrow-if-you-dare\/\">leverage<\/a>, concentration, etc.).\u00a0 All of these things, if not managed properly, can wreak havoc on your finances.<\/p>\n<p>As the saying goes, \u201cPlay stupid games, win stupid prizes.\u201d\u00a0 So don\u2019t play.\u00a0<strong>\u00a0Not even once.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Nick Maggiulli writes on his blog about \u201cWinning the Loser\u2019s Game\u201d a book written by Charles Ellis.\u00a0 In the book, Ellis describes what he calls \u201cwinners\u2019 games\u201d and \u201closers\u2019 games\u201d: In a winner\u2019s game, the outcome is determined by the correct actions of the\u00a0winner.\u00a0 In a loser\u2019s game, the outcome is determined by the mistakes [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[74],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/797"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=797"}],"version-history":[{"count":1,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/797\/revisions"}],"predecessor-version":[{"id":798,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/797\/revisions\/798"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=797"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=797"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=797"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}