In our Wits & Wagers: Your Money edition, let’s diversify our “bet” this time with bonds. By splitting up our investments we increase our chances that we’ll “pick” a winning investment. The same theory can be applied to investing. In gambling terms, this is called “hedging”. Our next Wits & Wagers board game betting option is to bet a little bit on our own guess and bet some on one of the other team’s guess. Let’s not forget we are making a prediction merely on past performance. And this is the basis of the “All Our Eggs In One Basket” strategy. In real life, this example would not be unlike an individual who holds a large concentration of his/her employer’s stock. When it comes to investing, huge rewards also tend to carry huge risk. In both editions of Wits & Wagers, the payoff can be tremendous. How many of us would be champing at the bit to wager on Emerging Markets now? Emerging Markets returned nearly 40% and was the TOP performer that year among our listed asset classes. You can only put your money in one asset class and only have performance data from the year prior. Now let’s go back a year - and our game rules are the same. Like “in pounds, how much potatoes does the average American eat each year?” hard (another actual question from the game). Plus, picking stocks or investments that consistently outperform is hard. If someone could accurately and reliably predict the market, why on earth would they share any of that information with anyone let alone you or me? When it comes to picking stocks or investments, it’s all a random guess as well. We’ll call this the “All Our Eggs in One Basket” strategy. Unless you really and truly know the answer - which is pretty rare - it’s a huge risk to put your entire bet for that round on one guess…err, answer. But it’s not uncommon to see a team load up on their own guess-I-mean-answer and shoot for the moon, swing for the fences, etc. How many cups of coffee does the average American drink in a year?įor the most part, our answers to these questions are all random guesses. It’s a hoot!Īnd honestly, who knows the answer to this question: And sometimes back again or to yet another different guess entirely. Lots of discussion, maybe some mild disagreements among partners over where and how to bet, and plenty of “coins” being moved from one guess to another. The betting part of the game is where the most action takes place. While we were playing (and what I’m really referring to is the betting part of the game at this point), I started to see some similarities between Wits & Wagers and investing. In Wits & Wagers the questions are often based around statistics and deliberately designed so no one at the table likely knows the exact answer. Strategy is not so much a part of the guessing-I-mean-answering part of the game. But a player could literally play the whole game without writing down a correct answer and still win due to how scoring works (see above). It is a trivia game but you really don’t have to know trivia to win. A look at the betting action! Who’s diversifying?!?
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