Lessons from the Obama Victory

This blog is not a forum for my political views but, rather on what we can glean from the way the victory unfolded.

I once read a book titled “Winning the Loser’s Game” by Charles Ellis. I don’t recall if I ever finished it—probably not—but one of the major themes of the book is that investing is a game for Losers, much like tennis.

The idea is not that only Losers partake in these activities. Indeed, that cannot be the case in tennis unless one’s opponent is brick wall. Rather, the author espouses the notion that it is the action of the Losers, not the Winners, that determine the eventual outcome. In other words, you win by making the fewest mistakes. In tennis, it means not double-faulting, not slamming an opportunity for a power shot into the middle of the net, and not trying to be too precise into placement of a lob.

In investing, it could be argued that the best way to come out ahead is not to lose capital, even if means foregoing the advice of bartenders, cab drivers and hairstylists. It means recognizing that losing capital means, quite possibly, being out of the game, whereas losing an opportunity still means that the game is afoot.

This idea has always been a part of the CastleMoore investment philosophy, as a firm and as individuals before the firm was created. But in the aftermath of the Obama victory, when reflection is all that’s left, it occurs to me that the President-elect ran his campaign using a very similar blueprint.

He understood that the way to win was to avoid losing. He was aware that: (i) most of the time the party of a two-term president loses; (ii) the economy was in upheaval; (iii) unpopular wars were being fought on two fronts. In other words, he knew that the election was his to lose. Thus, the worst strategy he could have pursued would have been to be too explicit in his policies, thereby opening himself up to direct attack. Indeed, a large part of the criticism leveled against during the campaign was targeted to his vagueness in his policies.

He also managed to maintain composure in the face of market panic, another important attribute not likely lost on investors.

However we feel about President-elect's policies, we must acknowledge the near flawlessness of his campaign and lessons that can be learned from them, especially investors.