Stocks and Survivor

Hi all, it’s been a while since i’ve written here because quite frankly life has been crazy. For those who are unaware, last year I went on the tv show Australian Survivor where I competed physically and strategically with 23 other contestants while starving and sleeping in the dirt in Samoa. The show has been airing throughout February and March and has kept up a large amount of my excess time, which has meant I haven’t had the free time to look at new investment ideas.

This post is going to be a bit different to my others. I still don’t really have the time for a new full on stock pitch but I figured it would be fun to look at the game of Survivor, and compare some of the many similarities with the game of investing that we all love. Both are very strategic, but also require strong emotional control and resilience and I think it could be fun to look at what I learnt in Samoa and how it translates to the world of investing.

Take it Slow

Early on in the game I found myself on the bottom of the tribe, predominantly due to “overplaying”. While I knew a lot about Survivor in theory, I didn’t actually understand how to play Survivor. I immediately started attempting to make moves like I did know and I ended up getting outplayed by the people that started a bit slower and more cautiously. I luckily managed to scrape through, and as the game went on I was able to get a feel for the game, how to build connections and make moves properly. I feel like this is very similar to what happened when I first started investing. My first year and a half of investing was very poor. Instead of building a safe, diversified portfolio as I developed my skills, I jumped into concentrated investing in risky companies with high debt, complicated businesses and cyclical earnings. Naturally, I didn’t have the expertise to be in these sorts of investments with the limited experience that I had, and no amount of reading or researching could get over that. For activities as complex as Survivor and investing, experience is a very real asset and we should always be looking to walk before we run.

Keep it Simple

This is possibly the most important point I’ll touch on for my personal investing style. For me, there is nothing more satisfying in Survivor than seeing a complex strategic plan play out and outmanoeuvre less strategic players. While I enjoy this, the fact is that with complexity comes risk, as the more moving parts there are the more likely one is going to get jammed. Now this doesn’t mean that one should avoid complexity altogether, but if you’re finding yourself constantly coming up with convoluted ideas, eventually one is probably going to fail. Instead I believe you should be trying to keep it simple most of the time, while also picking your moments to seize with the right plan at the right time. Similarly, I believe that the majority of good stock pitches should be simple, and if you find yourself with a 20 page writeup for each stock you own you are probably overcomplicating things. That’s not to say avoid complexity, but instead keep things simple across the board and keep a high bar for more complex theses. This is an important thing to remember for me, as someone who tends to gravitate towards interesting, complex investment ideas.

Managing your Emotions

This is genuinely an area that I think investing greatly prepared me for. As mentioned, my initial experience didn’t go the way I had hoped and I spent a lot of time on the bottom of the tribe with seemingly nothing going my way. However, opportunities only come up if you stay focused, keep your head in the game and keep a positive mindset and that’s what I did. In fact, similarly to investing, it’s often at the bottom that the biggest opportunities come up. For me I cleared my head by going for swims, staring at the stars and digging into the fun challenges. Likewise, I think it’s an important skill for investors to be able to take a step back when the markets are down or their portfolio is underperforming as that’s when your decision making is most important. Figure out what works for you to clear your head, and try to keep a positive mindset.

Use the People Around you

Survivor and investing are both at their core individual games but with key social elements. A key element of Survivor is figuring out who you can trust and using them to bounce ideas off, gather information and navigate through the game together. On the investment side, whether it be management teams or other analysts, finding people you can trust is essential. In this case, trust isn’t just ‘are they lying to me?”, “can i take their words at face value?” but instead more importantly who has a proven track record of smart investment ideas or capital allocation. Find the analysts who are consistently churning out great ideas and outsource some of your idea generation to them. Find management teams with good incentives and a good track record and trust them with your money. While not a necessity, if you can find these people your investing experience will be much simpler.

Expect the Unexpected

It’s very tempting in Survivor to map out a path in the game and stick to it. Unfortunately, both the game and other players often have surprises up their sleeves. With only one winner allowed, people are constantly manoeuvring for position in ways you may not see coming and many of the weakest players are those who pick a route and stick to it. Similarly it’s easy for us as investors to make a model, listen to management guidance or look at historical numbers and assume a simple path forward. The last 5 years have shown how silly that can be, with a pandemic, multiple wars and now Trump being Trump in office, and that’s just on the big macro scale. There are always ways for things to go wrong and I think it’s very easy for us as investors to get complacent with our holdings or lazy with our analysis. While you may not be expecting the worst case scenario, you should always be aware and at least somewhat prepared for it.

Do it for the Right Reasons

Survivor is a brutal game. You are starving, exhausted, all while playing an intense mindgame of manipulation and lying. One thing that became very apparent early on is that the people that were struggling the least were the fans (such as myself). The fans were out there living their dream, and so when things got tough they had their love of the game to hold onto. Meanwhile there were many others who were on the show for purposes such as publicity, money and adventure. While all valid purposes, I noticed that many of them struggled with the conditions more due to not having that underlying drive and love of the experience to hold onto. Similarly, I believe that my love of finance and investing gives me (and I’m sure many of you readers) a genuine edge. Finance is a field filled with people in it for the money, who joined the industry because it would be the quickest way to a payday. For the most part, these people aren’t going to be doing the rock turning and deep analysis of people who are in it for a love of the game. Genuinely, if you don’t enjoy financial analysis, I would be putting all my money in some decent ETF’s and going to the beach because the incremental return on time and effort from active investing is surely not going to be worth it. Invest for the right reasons, and you’ll have those reasons to draw on when a position is going against you, or the market’s going crazy and you have to make a hard decision.

I hope you’ve enjoyed this, and apologies for my absence. I’m hoping to get back into the investing stuff once survivor wraps up and hopefully I can pump out some more interesting ideas. If you are still reading, thank you for your time.