As we have written, James and I recently attended BXU-Blackstone University in NYC. There were many fascinating themes, including the theme of gamification in investing. Despite anyone’s feelings about Blackstone, their place as a leader in the capital markets is undisputed. So, when they announce a theme, it is worth paying attention and this theme really got mine.
For starters – gamification is the practice of integrating game mechanics into non-game contexts, basically creating fun and competition to drive behavior in things that aren’t a game.
My initial reaction to hearing that the biggest alternative investment house was embracing gamification was fear. Fear that gamification trivializes the risks associated with making investment decisions. I was partially relieved, however, when a bit of research produced this presentation from the CFA institute which I found somewhat convincing in its support of gamification, albeit on a theoretical level:
Fun and Games: Investment Gamification and Implications for Capital Markets
Nevertheless, IRL (in real life), my fear returns when I consider the combination of advice delivered via social media, something we hear about weekly from clients, with the ability to quickly pivot to a trade within seconds, on the same device, and then have the rewards system programmed to reward animal instincts.
So, balancing these two competing perspectives, I wanted to share some key principles. As you consider the potentially positive effects of gamification on your own investment strategy (and your family’s) and how this might manifest in combination with the quality advice you receive from our team:
- Time is more important than timing
- The source of information may have undisclosed bias
- “Free” advice means you are the product
The consequences of gamification are that things will get faster, wilder, and potentially more dangerous. As always, we are here to support you in building and keeping your assets in a responsible and goal oriented strategy.