Why Investing Is Like A Game Of Chess

For those who are studying investing in depth, you will realize that investing can be view as a game and it has many similarities with strategy board games such as chess. Here is what we can learn about investing from understanding the game of chess.

“Chess is mental torture” Garry Kasparov

Like chess, investing requires us to train up our mental tolerance. Irrational market movements can be quite daunting if investors are not mentally prepared. Companies such as Sembcorp Marine Ltd (SGX: S51) and Ezra Holdings Limited (SGX: 5DN) has lost about 25% to 50% of their share price in 2 months. That is more than S$2.5 billion worth of equity being wiped out in less than 100 days. An investor must be able to handle such pressure.

“On the chessboard, lies and hypocrisy do not last long” Emanuel Lasker

Your reputation as an investor can only be proven through time. If you try to take short cuts in your pursuit of wealth, there is a high chance that your profits from your investments will not last. Speculators who focus on using insider information or share manipulation often got caught at the end.

“In my opinion, the style of a player should not be formed under the influence of any single great master” Vasily Smyslov

Craving out your own personal style of investing takes time. Many times, simply copying the strategy of a great investor will not work. This is because an investor has to be comfortable in the strategy and able to make clear and rational decision based on that strategy. If you are merely following someone else’s method, you might never truly make an investment decision with strong conviction.

“You may learn much more from a game you lose than from a game you win. You will have to lose hundreds of games before becoming a good player” Jose Raul Capablanca

Lastly, no one go into invest and win every single investment that he made. Mistakes will be made and it is our job to understand these mistakes so that it will become strong learning point for us, to propel us to the next level.

Foolish Summary

If you embrace the idea of investing for yourself, you will realized that there are many things in life applies to investing as well, even when you are just enjoying a game of chess.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim does not own any companies mention above