Give yourself a chance in a game that's full of losers

With a strong record and time on his side, the younger Nadal is bound to keep his opponents on edge for many matches to come.

Whether Nadal can take the lead in the world rankings adds to the suspense that makes professional sport so fascinating, at least to me.

Tennis is a test of speed and skill, not to mention endurance and determination.

The champion carries the most aces, the best return shots and the trickiest volleys.

The awesome energy that goes into the game is something most mortals will never be able to deliver.

However, amateur sport is a different story altogether.

If you asked me for a friendly game, you'd certainly understand the difference. I would probably turn out to be an utter disappointment.

Sure, you would probably beat me. However, you wouldn't get much satisfaction as I probably would not be able to return most of your volleys.

Most of the losses will be from unintentional moves I make.

In amateur sport, the game is won by the side that makes the fewest mistakes. This is referred to as the loser's game.

This observation, pointed out by Charles Ellis in "The Loser's Game", is characteristic of the world of investment.

Participants in the game of investment are beginners, competing against the wisdom of the markets.

To make matters worse, investment amateurs have untimely and incomplete information, making it immensely difficult for them to compete.

The game of investments thus boils down to a game of chance where the winning portfolio is the one having the fewest selection mistakes.

You may have heard about the infamous experiment that compared the stock portfolio selections of two parties.

 One group featured stock-picking experts. The other consisted of a monkey, well educated no doubt, armed with darts thrown on a list of stocks to indicate the picks. The results are inconclusive.

True investment professionals have access to information and the means to influence the market. Even then, these professionals still get burnt quite often.

This is because there may be several such competent investors in the market, who diminish the competitive advantage of individual participants.

Since you can't win in a loser's game, how then is the typical investor to "play" this game?

The first step would be to know yourself.

For most, it would mean to invest according to your objectives and constraints. For some, it could prove you don't have an edge in the game.