Speed Chess and the Art of Patient Investing

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Yesterday we looked at the power of a slow, methodical pawn. Today we look at the opposite end of the spectrum–speed chess. In speed chess, both players have 5 minutes (or less) to complete an entire game of chess. (No, I’m not making this up.) They use a chess clock that has two digital timers. After a player makes a move, he or she presses a button on the clock that stops their timer and starts their opponent’s clock. If a player runs out of time, he or she loses, regardless of the position on the board. Sometimes we try to take the same approach to finances and particularly investing. We’ll come back to that, but first let’s check out speed chess further.

If you’ve never seen a game of speed chess, check out this short video clip of a speed chess game. Note, it starts off slow, but heats up toward the middle:

In case you missed it, the player on the left, a grandmaster by the name of Akobian, lost on time. Nakamura, the player on the right, became a grandmaster at the age of 15 years and 79 days, beating the record for the youngest player to become a grandmaster, previously held by none other than Bobby Fischer.

Speed chess is a lot of fun, but it doesn’t usually produce the best quality of chess. A lot of mistakes are made in a 5 minute game because you don’t have enough time to carefully plan your moves. Personal finance and investing can be the same way, particularly if you’re caught up in a get rich quick mentality or are just too impatient. Like speed chess, trying to get rich quick causes us to make costly mistakes. It causes us to jump in and out of stocks or mutual funds as we try to catch the next rising star. It may cause us to over-leverage ourselves in real estate.

At the time, all these financial moves may seem gratifying. You’ve heard the saying, “Don’t just stand there, do something!” In an emergency, doing anything is better than doing nothing at all, right? Well, with investing, and particularly during turbulent markets, often a better saying would be, “Don’t just do something, stand there!” Many times I’ve just stood there watching the markets decline along with my investment balance. But given enough time, the markets always come back. There were some not insubstantial market declines recently. Many recommended getting out of the market during these ups and downs. If you did, you would have missed the recent gains in the market. The point is, wealth at any level is a long-term game, not a 5 minute game of speed chess.

With that, let’s turn to our chess puzzle for the day. This one comes from a game between Bobby Fisher and Paul Benko. Its white (Fisher) to move and gain a winning advantage:

Good luck and remember to leave a comment with what you think is the best move.

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