Reflections on the Adam Smith Money Game

The Money Game by Adam Smith

1. WHY DID THE MASTER SAY "GAME"? In this chapter the author explains that this is a book about image and reality and identity and anxiety and money. In this introduction, the authors states 2; one is who He is not and the other is the single sentence, the illumine, the apple falling on the head, that led him to the attitude expressed in the first sentence, that the world is not the way they tell you it is. The author explains that Adam Smith is a pseudonym. He also explain why it is call “game” and is because Drs. John von Neumann and Oskar Morgenstern developed, some years ago, a Theory of Games and Economic Behavior. This game theory has had a tremendous impact on our national life; it influences how our defense decisions are made and how the marketing strategies of great corporations are worked out. The stock market is the Game, and its purpose is to make money. 2. MISTER JOHNSON'S READING LIST “… the dominant note of our time is unreality." In this chapter the authors explain that there is a lot of literature of how to play the game and win, he also explains that Liquidity is the cornerstone of Wall Street. It is what makes it the financial capital of the world. The author talks about Mr. Johnson who run a fund named Fidelity and that has a very prestigious character, the authors also says that what loves of Mr. Johnson is that he does not talk about the stock market in terms of GNP and tax cuts and automobile production. He talks about whether reality and time are coexistent at the moment. "The market," says Mister Johnson, "is like a beautiful woman-endlessly fascinating, endlessly complex, always changing, always mystifying. I have been absorbed and immersed since 1924 and I know this is no science. It is an art. Now we have computers and all sorts of statistics, but the market is still the same and understanding the market is still no easier. It is personal intuition, sensing patterns of behavior. There is always something unknown, un discerned." And to understand the market the first thing you have to know is yourself. A man who knows himself can step outside himself and watch his own reactions like an observer. Mr. Johnson also says that Positive decisions have to be made by an individual; groups can't do it. The author says that the dominant note of our time is unreality, because of mass emotions. 3. CAN INK BLOTS TELL YOU WHETHER YOU ARE THE TYPE WHO WILL MAKE A LOT OF MONEY IN THE MARKET? In this chapter the authors explains that Dr. McArthur's probing outline is that there is a personality difference between the people who are good at finding stocks and the people who call the shots on the timing and manage the whole portfolio. Security analysts dog down information and come up with an idea about what should be bought or sold, but they do not necessarily make good conductors for the whole orchestra. Also the author states that the analyst is building inductively, but the real gunslinger of a portfolio manager can't stand second thoughts. He bounces with the stimulus, is enthusiastic, almost over responds. The analyst really wants to be right, his ego needs the pleasure of being right, and he would almost rather be right than make money. The aggressive portfolio manager doesn't really care about being right on each judgment, as long as he wins when you tot up the score. He has to be right more than wrong, naturally, but he tends to go in white-hot streaks and hope that his decisions add up more right-and so weighted-than wrong. What he is really doing is testing-quickly and unconsciously each stimulus against the "a perceptive mass" of his own intuition. 4. IS THE MARKET REALLY A CROWD? In this chapter the author says quotes Dr. Le Bon, a crowd was not merely a number of people assembled in one place; it could be thousands of isolated individuals. These he called a psychological crowd, subject to "the disappearance of conscious personality and the turning of feelings and thoughts in a different direction.". Because of this the author considers the market a crowd. The first thing we know, says good Dr. Le Bon, is that an individual in a crowd acquires--just from being in a crowd-"a sentiment of invincible power which allows him to yield to instincts which, had he been alone, he would perforce have kept under restraint .... the sentiment of responsibility which always controls individuals disappears entirely." The second element in Le Bon's crowd was contagion, the communication of feeling-"not easy to explain," he wrote-and "which must be classed among those phenomena of a hypnotic order." And the third element in Le Bon's crowds was suggestibility-"the state of fascination in which the hypnotized individual finds himself in the hands of the hypnotizer." Dr Le Bon also suggests that the crowds behave like women (idea that links to Mr. Johnson beliefs of markets). 5. YOU MEAN THAT'S WHAT MONEY REALLY IS? In this chapter the author says that scholars think money is more than just that green stuff in your wallet. Money has a mystical quality; the markets of antiquity were sacred places, the first banks were temples, and the money-issuers were priests and priest-kings. The point all these learned scholars make is that money is useless; that is, it must literally be useless in order to be money. Because of money´s mystical power, humans are slave to it. 6. WHAT ARE THEY IN IT FOR? In this chapter the author tries to explain why people play the game of stocks, he even says that "Ninety percent of investors don't really care whether they make money or not," The authors establish the following reason why people buy stocks: Love of a company/idea, Idea of being love for themselves, Envy of others, Tradition, long-run savings or long term asset, Idea that market magically always produces money, Socializing/Adrenaline, and Finally because of the possibility to save face by blaming broker of bad things. 7. IDENTITY AND ANXIETY. In this chapter the authors starts with anxiety. If the occupation is money-making in its pure raw white form, then anxiety must always be present, almost by definition, because there is always a threat that the money which represents the achievement can melt away. The authors also states that the strongest emotions in the marketplace are greed and fear. The author

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