[2025–2026] Week 12: The Money Game by 'Adam Smith'
Reading assignment and questions for week 12 of the Value Investing Seminar
(Note: If you are just joining the seminar, please start by reading the Introduction)
What I hope you got from reading The New Money Masters by John Train is the diversity of styles that can be successful in the market. What also came through to me when I read it was the impact that people’s personalities and backgrounds had on their investing approach.
As you continue to evolve as an investor, don’t worry about what’s ‘best’ in a vacuum. Rather, think about where your strengths naturally are and how to accentuate them, as well as any weaknesses you might have and how to mitigate them. In other words, learn from others but stay true to who you are.
Note: For those who want to read ahead, our next reading will be You Can Be a Stock Market Genius by Joel Greenblatt.
Week 12 assignment is to read The Money Game by ‘Adam Smith’ and answer the following questions:
Question 1: What can you learn from the book about how human nature affects investing?
Question 2: What insights about the time period described in the book are applicable to today’s market, and in what way?
Now it’s your turn:
Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.
Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.
Feel free to ask any questions about the reading in your comment.
Until next year,
Gary
About the author
Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.
Good fun read. Adam Smith artfully presents the financial market not merely as a market but as an intricate game
Question 1: What can you learn from the book about how human nature affects investing?
Adam Smith (George Goodman) makes clear that investing is not just about numbers and more about psychology.
Fear and Greed: The strongest emotions in markets. Rising prices trigger greed (“fear of missing out”), while falling prices trigger panic selling.
Identity & Ego: Investors often tie their self-worth to portfolio performance. When the market erases gains, it feels like a personal defeat, not just a financial one. This identity trap makes rational decision-making harder.
Crowd Psychology: Gustave Le Bon’s theories are woven throughout wherein individuals in crowds lose responsibility, become suggestible, and act impulsively. This explains bubbles and flash crashes. Pendulum overswings.
Performance Anxiety: Overtrading and the constant need to “stay in the game” create stress that undermines discipline. Anxiety erodes identity and serenity, leading to poor decisions.
Emotional Maturity: The best investors harness emotions rather than suppress them. As Smith notes, “You have to use your emotions in a useful way… operate without anxiety.”
Question 2:
Although The Money Game was written in the late 1960s, its insights feel remarkably current. the psychology, performance pressure, and crowd dynamics all these forces still remain alive today.
Bubbles repeat themselves: Just as investors once chased tulip bulbs or color-TV stocks, today we see similar manias in meme stocks, crypto, and AI hype cycles.
Short-termism dominates: Fund managers in Smith’s era were judged quarter by quarter, and the same pressure drives hedge funds and institutional investors now.
Technology accelerates herd behavior: Overtrading and compulsive “staying in the game” were problems then; now trading apps and social media amplify them.
Q1. Almost nothing in the investment decision making process has changed over time. The Game is played with a variety of biases influencing the decision making of the masses. Humans are involved and their emotions are the primary drivers of investment decisions. Fear and greed are two of the most influential emotions in making investment choices. Another large pressure on investors is following the crowd. Then there are are plenty of Game players in the field who are willing to take advantage of these emotions at the expense of the more uninformed and uneducated investor. To quote Charlie Munger " Show me the incentive and I'll show you the outcome." More rational decisions are those made by investors who can recognized the impact of their emotions. They have the ability to step back and look at a larger picture without emotions. Good investing isn't a function of being schooled or the complexity of the math involved, but rather to be able to large amounts of information and apply rational thinking. Perhaps even a bit of intuition. The end objective of investing is serenity, not excitement.
Q2. I found that almost everything is applicable to todays' market, with maybe the exception that the Game players now in the AI universe, leading to more short-term transactions. Another force found today is the focus on performance which has produced more reactionary trading. More work has been done since the 60's in the field of behavioral sciences which has shed light on the dynamics of emotions, but hasn't stemmed their influence. Just replace computers with AI and the results are probably not all that different.
Just as an aside, on page 76 they mention airlines. It was a surprise to see Braniff mentioned. I worked for them when it went bankrupt.