The Triumph of Hope

Warning: mild spoilers ahead for Season 2 of Squid Game.

In the new season of Squid Game, the players are faced with a vote. After watching over 90 of their fellow contestants gunned down in cold blood in a game of “Red Light, Green Light,” and with full knowledge from a former participant that continuing the game will result in almost certain death for every player, the group had the opportunity to end the game, if the majority decided to do so.

It was interesting to see how the game’s organizers (who certainly wanted it to continue) created the illusion of free will, while at the same time nudging players to continue; reminding them of the huge financial windfall available at the end, and yet downplaying the reality that 455 out of the 456 players would probably end up dead in pursuit of that victory.

For those of us watching from the comfort of our living room, a vote to continue makes little sense. An impartial outside observer sees the odds in a way that a participant in the game can’t.

It’s not exactly getting gunned down in cold blood, but the parallel in investing is the risk of ruin - suffering permanent losses. I encourage people to minimize their risk of ruin by diversifying. Avoiding leverage. Buying hard assets. Durable businesses. Companies that will remain profitable throughout a downturn.

The thing is… these kinds of assets go up less in the boom times. Generally speaking, hopping on a speculative boom requires no complex financial analysis, no following industry news, no listening in on quarterly earnings calls. Just buying and going along for the ride. And recently. you’ve made more money than the investors who have put in the hard work. Honestly, my numbers would have been better last year if I just bought Fartcoin and followed Taylor Swift around the world.

With eyes firmly on the prize, it’s easy to ignore the odds that might be stacked against you. The upside is just too high to ignore.

Of course, we know how these episodes have turned out in the past. We saw the first season of Squid Game. And many of us lived through the internet bubble of the 1990’s. We believe that this time will be different, or that we are somehow smarter than those who failed before us. We will get out in time, and pocket the easy profits.

Just like the Squid Game, I’ll decline the opportunity to participate. Watching it is very entertaining. If only people weren’t gambling so much on the outcome.