The concept for this article has been unashamedly stolen from Warren Buffet although it has been given an Australian flavour. He expounded the US version in a speech in 1984 commemorating the fiftieth anniversary of the book Security Analysis by Benjamin Graham and David Dodd, the bible of value investing.
He called his speech “The Superinvestors of Graham-and-Doddsville”. Its about successful investors and I’m calling it “The Orangutans”. Let me explain.
Imagine if you will a daily coin flipping contest conducted across the whole of the Australian nation. Everyone’s in. On the first day 24 million Australians flip a one dollar coin.
The rules are that if you flip heads you stay in, if you flip tails you give your dollar to the ones who flipped heads. Every day the losers drop out and the $24m pool of money is shared amongst fewer and fewer people.
After day one there should be around 12m people left in the game and each will have won a dollar delivering the ability to boast that "I doubled my money in a day".
This process goes on and every day the value of being in the game grows and the stakes rise for those left in. Assuming the honesty of the losers, after ten days of flipping there will be around 23,500 people left in the game and each will have won just over $1,000.
At this point there will be 23,500 people walking around Australia feeling pretty chuffed with themselves and their ability to turn one dollar into one thousand dollars in ten days. Pretty impressive.
And no doubt some of them would begin getting a bit of mileage out of their position, dropping it into the conversation at nightclubs, expounding their theories on how to throw heads at dinner parties and generally making hay.
The media would be stirring and the water coolers abuzz with talk of the local hero still in the game.
Five days of flipping later there would be 732 people left, each worth $33,000. Another five days later and there would be just 23 people left. By this stage, each flipper would have thrown heads twenty times on the trot and each would have cracked the magic sum of just over one million dollars each.
From one dollar to millionaire in twenty days. Wow.
Stop the contest and Australia would be swarming over the twenty, the flipping “elite”. The “Smartest” flippers in the nation. And they would make global headlines. And they would write books.
- “Flip for Success”.
- “20 Top Flips”.
- “The Psychology of Flipping”.
- "Flipping for Dummies”.
- “The Idiots Guide to Flipping”.
- “Rich Flipper Poor Flipper”.
- “The Way of the Flipper”.
- “Common Flips and Uncommon Profits”.
- “The Intelligent Flipper”.
- “Mastering Flipping”.
- “The Flipping Way”.
- "How I Flipped 52 Properties in 52 Weeks".
- “How I made one million flipping dollars in twenty days”.
.....and the most recent record busting bestseller of them all, “Stock Market Flippers” by Marcus “The Big Flipper” Padley.
And we would buy them.
Others would arrange motivational seminars on how to own a flipping massive portfolio in Queensland property starting with just one dollar. And the investment banks would launch capital guaranteed leveraged flipping products and the Exchange Traded Flip (ETF) industry would boom as it issued great new flipping products.
And we would buy them.
And we would trade online with E*Flip and CommFlip for a fraction of the cost of a full service flipper and some would trade highly leveraged “Contracts for Flippers”. And we’d buy ten CD Flipping Courses plus steak knives in three easy payments on the 1300 number on the late night infomercial.
And the irrefutable proof of the benefits of flipping would be the 20 people left in and their results. How could we argue with that. They exist. Flipping can clearly transform your life and yes, you too can flip.
Of course the results would have been exactly the same had twenty four million Orangutans been doing the flipping instead of twenty four million humans, but then Orangutans don't have the skill to issue any flipping exchange traded products, contracts for flippers, capital guaranteed flips, and they don't look quite as good on the ABC as people like Marcus Padley.
Bottom line - Yes we are on TV but we have no more ability to predict the future than anyone else. So don't credit us with anything more than looking good and sounding intelligent.
It’s a show for goodness sake - Enjoy!
Marcus Padley - Orangutan
For our daily Strategy advice you can join Marcus Today - click here for a free trial.
hahahah...oh dear..the kernel of truth
Marcus at his best! Enjoyed the satire.
Flipping hell Marcus. You've gone one better than your flying ferrett story this time!
Bravo Marcus - the most honest column you've ever written. Thank you.
"and they don't look quite as good on the ABC as people like Marcus Padley." - This is debatable. The Orangutan is a handsome beast...
Marcus, you have a way of communicating in markets that is refreshing and entertaining. Thanks a lot.
Warren Buffet is like this.... If you were looking for a perfect time to be born to ride the economic expansion post war, you would be almost exactly his age. Statistically, there was always going to be one fund manager like him. His recent failures illustrate that he isn't just better than everyone else, he was the lucky flipper and his approach worked perfectly for a while. Fooled by Randomness is a great book which covers things like this. It is like the stock market scam of sending 1000 recommendations by email to random people, then 500 to the ones that were successful the next day, then 250, and so on until you have a handful of people who have seen you be correct 5 times in a row and you offer them an expensive trading course. This survivorship bias ignores the failed recommendations. You also see it in stock indexes, as if the top X index shares are fixed and doesn't change year after year - dumb headlines like "If you had bought the top 20 shares 20 years ago you would be worth this much". They weren't the same 20 shares 20 years ago... PS can I have a signed copy of your book on Flipping.
Hi Simon - Unfortunately my Flipping Books are ten years old and I'm down to the last 30 out of 10,000 - they are an endangered species...like the Orangutans
love it. well done Marcus, you are in a dif class.
So now I find out that Warren Buffet was just lucky ....damn!!
Love your flippin' humor, Marcus. The question I want to know the answer to is why am I always the flipping loser?
Thanks Marcus, a great chuckle with enough imbedded truth to educate as well as entertain. Take a banana.
Hmm... it's a fun analogy to illustrate a great point. But the real world is a great and interesting place with many shades of grey rather than simple heads or tails outcomes. There is an enormous amount of randomness in the world and many forecasters are no better than average at their craft. But the work of Philip Tetlock provides great insight on this area. He finds that there are people who are good forecasters. There are skills that correlate with forecasting and that forecasting can be improved with deliberate practise. He also finds that the most famous forecasters are often the worst at forecasting. Apparently a compelling story told with conviction is better for a media sound-bite than actually forecasting anything. I'm still not quite sure where you fit on this one, Marcus. You show some great critical thinking and analysis sometimes, but also maybe a tendency to promote a catchy cliche rather than a probabilistic approach.
Hi Lillian - you have missed your flipping calling - a wordsmith
Love your work, Marcus. Always enjoy reading and listening. I saw in the comments you still have some books, thanks for the heads up. Just ordered one via the MT website. I promise it will never go next to "The Intelligent Investor", I flipped the idea of buying it after listening to you.