Consistently not stupid
weekly 21 2025
Lately, I keep thinking about a quote from Charlie Munger:
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
You probably already know the analogy between investing and tennis. It originally comes from Extraordinary Tennis, Ordinary Players, a book by Simon Ramo, and was later expanded on by Charles Ellis in a 1975 memo. I first came across it through a 2003 memo by Howard Marks.
For those unfamiliar with the analogy, here’s a brief summary: In his book, Ramo draws a striking distinction between two types of tennis: professional and amateur.
Professionals win points. They place their shots just out of reach of their opponent. Their precision, technique, and strategy determine the outcome of the match. The winner wins the game.
For amateurs, it’s the other way around: they lose points. They hit into the net, out of bounds, or double fault. The winner isn’t necessarily the best player, just the one who makes the fewest mistakes. It’s not that the best player wins, the least-bad player doesn’t lose.
Ramo showed that in professional tennis, 80% of points are won, while in amateur tennis, 80% are lost.
Why does this matter to investors? Because the stock market looks a lot like amateur tennis. Many retail investors think they have to “win”, with perfect timing, the ideal buy, or the ultimate market move. They chase returns with risky plays. They think like professionals but play without control. The result? They lose, not to others, but to themselves.
Smart investors understand: it’s not about brilliant moves, it’s about avoiding dumb mistakes. Don’t buy junk. Don’t trade out of panic. Don’t get caught up in short-term thinking. Don’t overpay. Just keep the ball in play. And that takes discipline.
If you’re investing within the middle of your circle of competence, you can sometimes make a big move and try to win. But the moment you’re at the edge of that circle, where doubt sets in and information is lacking, the goal isn’t to win, it’s simply not to lose.
Investing is just like amateur tennis: the one who makes the fewest mistakes stays in the game the longest.
Let me finish with another quote from Charlie Munger, from the 2015 Berkshire annual meeting:
“If people weren't so often wrong, we wouldn't be so rich.”
My gut tells me that we’re in a market right now where avoiding stupidity and mistakes matters more than swinging big and aiming for winners.
This week
On Tuesday, lesson 13 of our introductory series on value investing was published: The Psychology of Investing.
You received the Semapa Update: Continue waiting? earlier this week.
Nextensa also released its figures, but unfortunately, nearly a week later, our data provider still hasn’t updated the data. For the price we pay, you’d expect faster service. Sadly, that’s one of the downsides of investing in smaller European stocks.
Since the investment case for Nextensa doesn’t hinge on quarterly results but on the significant undervaluation relative to book value, I’ve included the update under “Short News” below