process
Win by not losing
The rule
For most people you win by not making silly mistakes, like in gully tennis. Stay steady, trade little, and don't guess the next move.
Where it flips
But steadiness can turn into being stuck. Never revisiting your plan when your goal, income, or life truly changes is its own silly mistake. Trading little means skipping needless churn, not ignoring real change.
Ellis compared normal investing to amateur tennis. You do not win by hitting fancy shots. You win by making fewer silly mistakes than the other side. For your money, this means one steady habit wins: bring your holdings back to your written target, keep trading and cost low, and don't rebuild your plan after every news flash. Bringing things back to target is just a repair for drift, not a guess about what rises next. Its value is in holding back. A simple, cheap, well-spread plan can be the finish line, not a stop on the way to constant activity. You don't need to be clever to win. You just need to skip the blunders that lose.
A worked example
A 60:40 plan drifts to 72:28 after shares run up. The steady investor uses fresh money to bring it back toward target. The one chasing the winner lets shares ride and now carries more risk than the plan ever allowed. [illustrative]
How to spot it
- ·a written drift band and target decide what to do, not your mood
- ·trading and cost are kept low on purpose
- ·the plan is not rebuilt after every news flash
Charles D. Ellis · Winning the Loser's Game