Excellent Investors Play Chess


Last week, as I’m cleaning up after dinner, my 11 year-old son (otherwise known as ‘KidMaster’) is sitting at the kitchen counter, eyeballs glued to a laptop screen. In an attempt to disrupt the digital world’s grip, I lob the most banal question available, ‘what are you doing’?

Not surprisingly, KidMaster doesn’t respond. No blinking, no recognition, no acknowledgement of my reaching out to connect with him through the ancient art of verbal conversation. Oh well. It’s a dying art anyway, and my wanting to engage in conversation is merely proof (gulp!) of advanced age (i.e., older than 19) and pending obsolescence.

So I break from dinner prep and shuffle over to KidMaster. Purposely invading his space, curious to know exactly what virtual power has him captivated, I lean in to take a look. KidMaster ignores me. He’s certain that humans who have lived long enough to gain entitlement to vote have negligible, and fast dwindling, wattage of sight and comprehension.

“Shoot!” he exclaims.

KidMaster is playing chess. And he has just been checkmated.



KidMaster Finds A Rube

Frustrated, KidMaster turns toward me.

“Hey Dad, wanna play?”

“I’ve never played chess,” I answer.

“You’ve never played?” KidMaster beams. He’s found a victim, someone who will suffer quick defeat at his hands.

“You’ll learn. It’s easy. Really. I’ll show you.” He grins mischievously.

So we play. KidMaster teaches me the basics, though he doesn’t mind holding back information that may be too detrimental to his chances of winning. As I’m struggling to remember the name of each playing piece and the powers bestowed upon the Rook, Knight, Bishop, Queen, King and lowly Pawns, KidMaster is smiling, teasing me, and enjoying every moment (I make a mental note to reinforce good sportsmanship etiquette at a later time).

We continue playing one game after another, KidMaster repeatedly smoking me along the way. As bedtime approaches, I feel like I’m getting hooked and want to keep on playing but KidMaster is tired and, besides, he wants to end the evening knowing he has beaten Dad. I get it.

“Tomorrow we continue?” I say to KidMaster before turning out the lights. Too tired to respond, he falls asleep as soon as his head hits the pillow. His day has been a success.

The Rube And The Lightbulb

With KidMaster cozy in bed and deep in zzzzzzzz’s, I return to the laptop. Intrigued, hungry to learn more, I play game after game, studying the computers moves and following its strategies.

Then, a funny thing happens as I’m sitting alone with the laptop. I realize not only the similarities between chess and investing, but also the investing advantage chess players have simply because they know how to employ strategy, patience, and self-discipline.


How The Game of Chess May Improve Your Investing

It’s not like you MUST learn chess to become an excellent investor. It’s just that a chess players mindset is extremely well-suited to improving  investment skills. Here’s what I’m talking about:

  • Avoiding Risk

Chess. Winning players know that their strategy must include risk avoidance. Because winning at chess is not about being aggressive. Rather it’s about setting up an effective system, being patient, waiting for opportunities, and striking when the odds are stacked in your favor.

Investing. Successful investors are patient, disciplined, do their research, do not chase high flying stocks but wait for investment opportunities, both on the buy and sell side.

  • Diversified Attack

Chess. Winning players utilize strategies that include an effective defense and multi-faceted attacks.

Investing. Successful investors buy insurance (i.e., home, auto, life – defensive protection), prepare an annual budget (strategy planning) and build a diversified portfolio, one built for growth (stocks and stock ETFs) and safety/income (bonds and bond ETFs).

  • Flexibility

Chess. Winning players recognize when a strategy, or a particular move, is not working, and do not hesitate to change.

Investing. Successful investors monitor their portfolio. They consider their goals, the current investment environment, and the many changes to the environment that may happen in the future. And they make changes when one or more parts of the portfolio are not performing well. They do not hold onto losing securities simply on the hope that losers turn into winners, nor hold on to winners forever thinking that prices only move up. Because hope is not a strategy.

  • Noise Cancellation

Chess. There’s a story about a high level chess game in which one of the players complained to the judge that, against the rules, his opponent was smoking. Looking at the opposing player, the judge saw an unlit cigar on the table. The complaining player then said, ‘yes, it’s not lit but he’s threatening to smoke, and the threat is more powerful than the execution!’ Clearly, the opposing player was effective in messing with the complaining players mind. And he succeeded in throwing the complainer off his game.

Investing. Questionable outside information often messes with investors minds, causing investors to sell in a panic when prices are low or greedily buy when security prices are high. Successful investors know to stay the course, stick with their plan, and not make investing decisions based on a herd stampeding one way or another, or articles published by a media industry that functions first and foremost for the purpose of attracting advertisers (i.e., money), and is often not a reliable or accurate source of information.

  • Ego Repression

Chess. Winning players are humble. They do not compare them self to other players. They are not ruled by ego, do not care about titles, what school someone attended, what kind of car their opponent drives, and recognize that they could lose on any given day.

Investing. Successful investors take winnings in stride. They do not compare them self nor measure their net worth against others. Instead, they are concerned with effectively carrying out their investment plans, caring for them self, protecting their family, and being grateful for what they have.

Revenge Of The Rube

After a fair amount of reading, and too many games played against the computer, I’m getting a decent handle on the game of chess. For me though, rather than chess skills informing investing ability, it’s my investment knowledge that may be playing a hand in learning how best to succeed at chess.

And I’ve resumed my games with KidMaster, who isn’t hugely thrilled with no longer being able to sucker me into poor moves, or winning every game. But he enjoys playing, and I enjoy playing with him. And though he still loves throwing it in my face when he wins, I’m guessing what he loves even more is hanging out with me, playing a game. As do I.


Enter Buddha

A parent is to give freedom to the child. From the beginning, the effort is to help the child be him / her self. The parent does not exist to impose their ideas nor to give shoulds and should nots. Rather, the parent exists to support, strengthen and nourish the child.