Zugzwang, a technical term in chess, is originated from German meaning compulsion to move. Whoever is to move is put at a disadvantage. In the playing of chess, Black and White move in sequence without any disruption. No one can abandon a move. So, there may be conditions that it is your turn to move, and all your possible moves will make you worse, such as a Knight is to be killed or a piece is to block in your King's way and hence make it more vulnerable.
That reminds me of Pascal' wager. Pascal, the great French mathematician, when asked if he believes that there is a God, he did not go find the odds of God's existence, but to consider the consequence of his possible guesses. If he said that there is no God, and in the end, God does exist, then he would have serious troubles. If he said that there is a God, and it turns out that there is no God at all, then he has nothing to lose. Thus he could safely say that God does exist.
Zugzwang and Pascal's wager are two different concepts with similar mindset which I think very important in investment. Whenever I make a investment, I don't bother finding out the possibilities of every outcomes -- I can never get a precise answer. Instead, I try to make sure every possible outcomes are all good to me, or at least no harm to me.
Sometimes, I have to ponder whether to sell a certain stock. But all I do is making sure that, to sell or not to sell, all will be in my benefits. In other words, to sell it, I cash in the profits, while not to sell, I have a good long term stock in hand.
I will never put myself in Zugzwang.
The institutional investors seem always in Zugzwang. For example, when a fund in Taiwan is set up, it has to buy stocks within 3 months so that more than 70% of its portfolio has been built up. Another Zugzwang condition is so-called the forced cut loss. Every company has a rule to cut loss. When triggered, the traders are to clear all that particular stock out without any concerns. They call it disciplines, but I 'd like to call it stupid if you are a value investor. However, if you are a technical investor, please kindly forget and forgive my words.
About a month ago, I was invited to a lady's club to give a lecture. I told them that if only they can understand and apply the Pascal's wager, they would be better off for that very reason.
I hope they take my words for it.
That reminds me of Pascal' wager. Pascal, the great French mathematician, when asked if he believes that there is a God, he did not go find the odds of God's existence, but to consider the consequence of his possible guesses. If he said that there is no God, and in the end, God does exist, then he would have serious troubles. If he said that there is a God, and it turns out that there is no God at all, then he has nothing to lose. Thus he could safely say that God does exist.
Zugzwang and Pascal's wager are two different concepts with similar mindset which I think very important in investment. Whenever I make a investment, I don't bother finding out the possibilities of every outcomes -- I can never get a precise answer. Instead, I try to make sure every possible outcomes are all good to me, or at least no harm to me.
Sometimes, I have to ponder whether to sell a certain stock. But all I do is making sure that, to sell or not to sell, all will be in my benefits. In other words, to sell it, I cash in the profits, while not to sell, I have a good long term stock in hand.
I will never put myself in Zugzwang.
The institutional investors seem always in Zugzwang. For example, when a fund in Taiwan is set up, it has to buy stocks within 3 months so that more than 70% of its portfolio has been built up. Another Zugzwang condition is so-called the forced cut loss. Every company has a rule to cut loss. When triggered, the traders are to clear all that particular stock out without any concerns. They call it disciplines, but I 'd like to call it stupid if you are a value investor. However, if you are a technical investor, please kindly forget and forgive my words.
About a month ago, I was invited to a lady's club to give a lecture. I told them that if only they can understand and apply the Pascal's wager, they would be better off for that very reason.
I hope they take my words for it.
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