Took Alistair and Ryan to Ocean Park just before Term 4 start on Monday. Long story short, we tried to beat the crowd and had lunch at 11:30 next to the games area. While we were eating the crap fast food there (wonder why they never serve decent food in amusement park?), we were watching people pay to play games at the stall to win those soft toys hanging above the stand. And everytime someone wins anything, they'll ring the bell loudly (Remember 77777? the slot machine in the casino?). There were many different games, a catapult game to get a frog into the hole; throw a ring into a bottle neck; throwing bean bags at the stacked cubes; basketball; kick soccer into holes; and a softball shooting game to name a few.
Alistair watched as we were eating and he was gagging to try his luck (or skill he thought). He counted the frogs where people tried to catapult into the hole; he had "experience" with throwing rings into the bottle necks (we had a bucket load last time and got none in); and he knew how hard it was to dismantle the lead cubes with bean bags. But he was confident that with his super soccer skill, he could kick the soccer balls into the many holes. The result?
There was this one ridiculous game which i thought was a crime to be allowed in the Park. The game was simple, just to throw a ball into any coloured squares. But, listen to this, all the white squares had holes below them that drain the ball out for collection EXCEPT the coloured squares, which had a shallow base so even if you're skillful or lucky enough to land a ball in the square, it would most likely to bounce out. This game is so deceiving that IMHO is a crime to conn the kids into paying (i mean playing).
I was the sober guy who kept telling Alistair the odds in each game (I wasn't popular to be honest). But in real life, am I the sober one when it comes to investing in business? How many times was I being conned into these seemingly easy games?
- Monopoly SOE power generator yet to realise that they don't have pricing power as the government use cheaper pricing from the power generators as a policy tool to stimulate economy
- Oligopolistic Oil company that seemed very cheap but that was trading at the peak of the cycle
- Downstream Gas Distributor with all the reasons to prosper given environmental concerns and monopolistic nature; yet to find out that the majority owner has a different agenda for this vechicle (crown jewel asset in the parent co)?
Other seemingly easy "games" that are known not to be easy that i am reminding myself to never touch:
- Capital intensive, yet extremely competitive sector of Airlines
- the very cyclical ports and container shipping industry
- cat risk prone tech industry (e.g. HCV drug, BMS Opdivo being killed by Merck's Keytruda)
In the end, we played the basketball game (which the odds were well understood) at the other end of the park where the ring was not as high up. Ryan scored 2 out of 4, Alistair scored 1 out of 6 and I scored 3 out of 6. We won an air Hammer and a Cookie Monster soft toy.
The lessons here are:
- Understand the role luck plays in a game vs required skills. Operate within circle of competence (I am relatively more skillful at basketball than catapulting frogs)
- look at all the possible traps in the game (ie the shallow base in the colour squares game)
- operate only in a game where you understand the odds and can foresee the possible outcomes
- play in a "boring" game (vs a glamorous one) which you can almost certainly walk away with a small price at least
- find a stall with a good smiling operator that is happy to give you the price vs those stall operator with a bad attitude that hate to give you a price when you win
- don't get sucked-in by the bells of others' winnings!
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