You cannot win if you do not play

“You cannot win if you do not play.” Business and investing have many parallels to gambling…

By Morf Morford

Tacoma Daily Index

A proverb of gambling is “You cannot win if you do not play.”

Business and investing have many parallels to gambling, and this is one that holds true.

“It is better to have loved and lost than to have never loved at all” is a romantic counterpart to the same idea.

The one thing every worker, employee or investor has is time: how we use, invest or waste it has everything to do with our level of satisfaction at the end of the day or at the end of a career.

Maybe I’m getting cynical, but the romantic proverb “It is better to have loved and lost than to have never loved at all” is feeling more tangible every day.

Businesses losing their momentum, if not their entire existence has become the center of more business articles than I’d ever want to count.

Each loss, large or small, represents the death of a vision, an idea, perhaps a great one, as it evaporates in the hands of its creators – and investors, and customers.

Sometimes there is malfeasance or incompetence, sometimes it is pure dumb luck. A technological innovation, a recession, an unstoppable virus, an untimely death, it could be just about anything.

These businesses housed in their monuments of stone and luminous quarterly statements look like they will last forever.

But they don’t.

Another relevant, often forgotten saying is “The bigger they are, the harder they fall.”

As we saw all too often in the years following the 2008 Great Recession, businesses from banks to investment houses, fell like massive black holes through our economy, each with a massive swirling vortex that sucked many other businesses down into financial oblivion.

“Too big to fail” became the new mantra, as many businesses hoped they were. Or discovered they weren’t.

From Lehman Brothers to Washington Mutual, financial kingdoms fell and nobody knew where to look for (financial) shelter.

A home, once considered every family’s “best investment” suddenly wasn’t. Interest rates dropped – eventually (in Europe) dropped below zero and hovered around zero for years.

Residential real estate took years to recover, but it did. With a vengeance. Houses, some vacant for years were suddenly worth vastly more than any of us could have imagined. And now many of them sit empty again, this time with absurdly geometrically multiplied assessed values.

You can almost feel the near-gravitational pull of money tugging at those tectonic plates underneath us all. The problem though, is that it tugs us with irresistible force, in all kinds of contradictory directions.

High-demand (and high-priced) urban centers (especially in San Francisco and New York City) have essentially emptied out as people work from home – and don’t need to be physically near their workplaces.

I don’t hear the phrase “too big to fail” any more. I think we have all become afraid of what it might really mean; nothing is too big, and any failure on that scale would take down many businesses, if not entire industries.

And possibly even more.

I’ve never liked the stock market as casino metaphor, but it turns out that virtually any investment, from romance to the stock market has more of an element of chance than most of would like to believe.

“Creative destruction” is no longer an abstraction discussed as a topic of case studies in business seminars; it is hitting every one of us. It might be interest rates, trade deficits, national debts or some pesky virus, but those variables on the economic landscape hover like poisonous insects (or murder hornets) reminding us all, individuals and businesses, of our own mortality.

“The only certainty is change” has come true with a vengeance.

Those businesses – and individuals – able to flex with the demands of the marketplace may do well – others may end up making their own version of “lemonade” with the “lemons” the market gives them.

You’d think there’d be some sort of guardrails against these improbable events, but if you look at the history of large bankruptcies, instead of getting smaller and less frequent, these catastrophic economic downturns get larger, deeper and even more intractable. You can see a summary of the twenty largest bankruptcies in US history here: Note how many were in the past fifteen years.

To use one more cliché/ proverb, whether you are in a relationship, politics or business, the one universal guiding principle is, you’ve got to be in it to win it; a second is, virtually nothing is as wonderful or as terrible as we think it might be.

Whatever difficulties we may face, the reality is that we can make it through, and have many times. The trick to survival, if not prosperity, is to stick to it.

There was a study of a variety of long term stock market investment strategies. They found that the most profitable, and least stressful, was not frantically trying to buy at the lows and sell at the highs – and avoid getting caught in the crossfire of over-extension and unexpected declines, but a slow and steady regular investment discipline, whether the market rises or falls (called dollar cost averaging) and just staying in the market.

Whatever happens, the market and the economy will recover.

It’s just a matter of who is around to pick up the pieces after a crisis hits.

Wealth grows slowly but steadily – and then suddenly.

For example, did you know that Warren Buffett made more than 99% of his money after the age of 52? Check out this article for the details:

Buffet used the single most powerful element, one we all have, and with patience, it paid off.

With enough time, and the determination to make it through any season, an investor, a business, even a city or a national economy, can make it through almost any difficulty or crisis.

You might think of the massive shifts of the economy as global financial mood-swings.

Sooner or later, at some level, maybe higher, maybe lower, we will re-establish an equilibrium.

We might have to hold on by our fingernails, but we need to never let go.

It’s the momentum that keeps us going. Once off the investment train, it’s difficult to get back on.