Wednesday, October 13, 1999

Playing Not to Lose


On Sunday, the undefeated Dallas Cowboys played the Philadelphia Eagles, who had yet to win all season. In fact, the Eagles had lost 20 of their last 23 games. Dallas entered the game with arrogance -- they knew their offense had scored 41, 24, and 35 points in the previous games, while the Eagles hadn't scored an offensive touchdown in the last 18 quarters.

With this in mind, Dallas played extremely conservatively against the NFL's 30th ranked offense. At half-time, Dallas led confidently, 10-0. the Cowboys were playing not to lose.

The Eagles, on the other hand, knew they were playing a stronger team. They pulled out all the stops. They took some risks. They played to win. As motivational speaker Zig Ziglar teaches, playing to win will usually beat playing not to lose. The Eagles rallied to score 13 points in the final 12 minutes and win the game 13-10.

What does this mean to your investment dollars? Well, to some people, investment money must be handled with extreme conservatism. Complete safety is the most important option. Not losing means keeping money in passbook savings accounts, or in gold, or inside the mattress. It doesn't matter to them that inflation may be eating away at the value of their investment or that the stock market has historically provided the best return on the dollar for any extended period. (Now, I am not advocating reckless investing. Those who throw all their money into penny stocks and invest on wild rumors will often find their desperate passes intercepted for a complete loss.)

But playing not to lose is not the answer. With a little time and effort, people can learn about the stock market. They can learn about index funds, which reflect overall market trends, and learn about strategies aimed at beating the market. They can have a chance to be real winners. Sometimes only playing not to lose is a losing strategy.

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