Thread by @jsmian

What makes Warren Buffett the greatest investor of all-time?

He is the only infinite-minded investor in the stock market, which is an infinite game. 🧵

1) An infinite game is not bounded by time and the objective is not winning but ensuring the continuation of play.

An infinite game continues with you or without you.

2) Investing is an infinite game. But most people play with a finite mindset. That’s a problem.

Finite play in an infinite game is contradictory.

3) The impulse of a finite player is to always be trading, getting drawn in by shifting prices and new trends.

They feel like they don’t have a choice.

4) James Carse explains:

“Finite players veil themselves because of a belief that they will be seen as losers if they do not play."

They care too much about what other people will think if they just stop.

5) Over time, they inevitably race through the resources and will to stay in the game.

Any surprise a number of established hedge funds are shutting down?

6) An infinite mindset knows there is winning and losing.

Sometimes you’re ahead of the market, other times you’re behind.

The goal is to constantly improve and keep the torch burning.

7) In an infinite game, the only true competitor is yourself.

8) Warren Buffet is the best infinite player of all time.

He bought his first stock at age 11 and launched his investment partnership in 1956, when he was just 25-years old.

9) He set his own ground rules:

No management fee;
25% of any gains beyond a 6% hurdle;
and agreed to personally absorb a percentage of any losses.

10) Buffett told his investors:

“I’ll run it like I run my own money, and I’ll take part of the losses and part of the profits.

And I won’t tell you what I’m doing.”

11) He even stated:

“If any three-year or longer period produces poor results, we all should start looking around for other places to have our money.”

12) Buffett delivered strong returns for over a decade, but in 1969 wound down his partnership.

He disclosed being “out of step with present conditions.”

He had no desire to grope around hoping to get lucky with other people’s money.

13) I am not attuned to this market environment,” Buffett said to investors.

“And I don’t want to spoil a decent record by trying to play a game I don’t understand just so I can go out a hero.”

14) As an infinite player, Buffett was aware of the absolute freedom of the infinite game.

He knew he can always quit and come back to play at any time of his choosing.

The game will always be there.

15) Buffett returned to investing not long after and went on to build the most impressive long-term track record in investing history, while his competitors fell by the wayside.

16) Borrowing from @simonsinek's framework as described in his book, The Infinite Game, we can make a few distinctions on what it takes to play successfully in the stock market over the long run.

17) First, you must have a “just cause” or an inspired purpose.

The object of play should be about more than just making money.

18) Second, you need trusting teams and clients, with an alignment of values and vision.

This is a lot easier said than done. Most people don’t know what they stand for.

19) Third, and most important, existential flexibility.

When your entire business model is challenged, you must be willing to blow up your business to advance your just cause.

20) And lastly, courage to do all of the above.

The pressures around us are overwhelming and the ability to adopt an infinite mindset, I think, will determine how long you stay in the game.

Good luck!

21) Want to give yourself an edge? Follow @jsmian.

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