Levels of the Game

Abstract

Institutionalization of securities markets and the increasingly rich research resources of institutional investors and the sophisticated market intermediaries that supply them with data, information, and judgement have profoundly changed the nature of the investor's working environment. Winning the “Loser's Game” is getting harder and harder. The author argues that investing can be “unbundled” into different levels of difficulty and cost. Ironically, cost and success are in conflict. He argues that investment professionals and their clients are least likely to succeed at the most costly level of investing: buying and selling individual securities. Both managers and investors would be wise to refocus on the highest level of investing: determining realistic long–term objectives, formulating realistic policies to achieve their objectives, ad sustaining wise commitments. At this higher level of the game, everyone can be a winner.