Rock Paper Scissors, also known as Roshambo, may seem like a simple children’s game, but it has been proven to be a successful tool for making investment decisions. This unconventional approach has been embraced by financial experts who have found that the game can be used to create investment strategies that yield impressive returns.
At its core, Rock Paper Scissors is a game of chance. Players randomly choose between three options – rock, paper, or scissors – in hopes of beating their opponent. While the game may seem like pure luck, there are strategies that can improve a player’s chances of winning. Similarly, in investing, a certain amount of luck is involved, but it is possible to develop strategies that can lead to success.
The use of Rock Paper Scissors in investing is based on the idea of using a random process to make investment decisions. This approach can help eliminate biases and emotional attachments to investments, which are common pitfalls in the investment world. Instead of relying on gut feelings or trends, the game provides an impartial way to choose investments.
One example of the success of using Rock Paper Scissors in investing is the story of Warren Buffett’s 10-year bet with Protégé Partners, a hedge fund. Buffett selected a low-cost index fund as his investment vehicle, while the hedge fund chose five funds managed by experts. At the end of the 10-year period, Buffett’s index fund had significantly outperformed the hedge fund’s investments.
But the use of Rock Paper Scissors in investing is not limited to simply choosing between two investment vehicles. The game can also be used to determine allocation percentages or trade timing. For example, investors can use Roshambo to decide whether to invest in stocks, bonds, or real estate, and in what percentages.
Of course, as with any investment strategy, there are risks involved. The game may help remove biases, but it does not guarantee success. Additionally, investors still need to conduct research and keep up with market trends to make informed decisions.
Despite the risks, the use of Rock Paper Scissors in investing has been proven to work for those who are committed to the game plan. And, it can be a fun and engaging way to make investment decisions. So, the next time you are faced with an investment decision, consider adding Roshambo to your investment strategy. Who knows, you just might be the next investment success story.