Risk and the Art of Avoiding Stupidity: Why You Should Quit Trying to Play Like a Champion.

“The sign above the players’ entrance to the field at Notre Dame reads ‘Play like a champion today’. I sometimes joke that the sign at Nebraska reads ‘Remember your helmet’. Charlie and I are ‘Remember your helmet’ kind of guys. We like to keep it simple.”

- Warren Buffett, chairman and CEO of Berkshire Hathaway

“People are trying to be smart. All I am trying to do is not be idiotic, but it’s harder than most people think.”

- Charlie Munger, Vice Chairman of Berkshire Hathaway

There are lots of ways to succeed in life.
Thousands of line items on the long list of things to do.

But avoiding stupidity—navigating around the most obvious dumb stuff—well, that’s a much shorter list.

Buffett and Munger, the greatest investing duo of all-time, would identify chasing booms as one of those.

They famously remained on the sidelines during the explosion in dot com startups . . . and the subsequent crash. They’ve been vocal about comparing unregulated crypto markets to a Vegas casino.

Buffett and Munger aren’t trying to “play like champions” in the financial market because they’ve been around long enough to know that, over the long run, it’s impossible.

They’re simply trying to avoid stupidity through patience and discipline, letting the market come to them. Berkshire is sitting on $147 billion dollars in cash right now.

“Sit-on-your-ass investing,” Munger calls it. “You’re paying less to brokers, you’re listening to less nonsense, and if it works, the tax system gives you an extra one, two, or three percentage points per annum.”

Playing like a champion is overrated.
Remember your helmet.

Let’s examine this further.
For example, in banking.

The giant banana peel to avoid here is a bank run: all your customers demand their money at the same time.

Okay, how do you avoid that?

Three primary ways:
1. Diversify your customer base.
2. Don’t borrow long and lend short.
3. Always have a Chief Risk Officer in place.

Silicon Valley Bank, which folded in March and was the biggest retail banking failure since the Great Recession, was 0-3. The bank was too busy trying to play like a champion, treating the bank like a growth stock instead of a prudent, stupidity-avoiding protector of wealth.

Let’s look at a growth business, though—say, the NFL.

What kind of stupidity should the NFL avoid?

A top three comes to mind:
1. Avoid short-term player paralysis.
2. Avoid long-term brain damage.
3. Avoid gambling at all costs.

Regarding items 1 and 2, let me say this: As a former collegiate quarterback with a handful of concussions, the stupidity in football is baked in.

Football is violent.
That’s why we like it.

However, when it becomes routine to end games prematurely because of player paralysis— which happened twice this preseason—and when chronic traumatic encephalopathy (CTE, a fatal brain disease) can be detected in the living, it may be too late to start thinking deeply about what stupidity can be avoided in the NFL.

But with gambling, NFL leaders are trying to play like a champion, instead of simply remembering their helmet.

This is what Charlie Munger was talking about.
This is the idiocy that could be avoided, but it’s harder than most people think.

But for decades it had been!

In April of 1963, NFL Commissioner Pete Rozelle suspended two of the league’s biggest stars —Green Bay Packer Paul Hornung and Detroit Lion Alex Karras—one full season for wagering on football.

Pete Rozelle explained, “This sport has grown so quickly and gained so much of the approval of the American public that the only way it can be hurt is through gambling.”

Fifty years passed and the NFL remained committed to avoiding stupidity.

During a 2012 deposition, an NFL lawyer stiff-armed the suggestion of sports gambling because it would “negatively impact our long-term relationship with our fans and negatively impact the perception of our sport across the country.”

Why run a reverse now? The short answer is because “All the cool kids are doing it.”

In 2014, NBA Commissioner Adam Silver surprised the world by writing an opinion piece in the New York Times. It urged leaders to rethink their positions against gambling. Silver was encouraging a full-scale re-imagination of stupidity avoidance in major sports.

Silver ignored the 2007 scandal involving NBA referee Tim Donaghy, who bet on games he officiated over the course of four years. Major League Baseball (MLB) then ignored its own dark past with gambling—the 1919 Black Sox threw the World Series, Pete Rose bet on MLB games —and quickly backed the idea.

So the NFL embraced gambling.
Can you guess what happened next?

NFL players gambled.

Josh Shaw :: Arizona Cardinals
Calvin Ridley :: Atlanta Falcons
Quintez Sephus :: Detroit Lions
C.J. Moore :: Detroit Lions
Shaka Toney :: Washington Commanders
Jameson Williams :: Detroit Lions
Stanley Berryhill :: Detroit Lions
Isaiah Rodgers :: Indianapolis Colts
Rashod Berry:: Indianapolis Colts
Demetrius Taylor :: Indianapolis Colts
Nicholas Petit-Frère :: Tennessee Titans

Eight of the eleven effectively ended their football careers by gambling.

The owners shook their heads in mock disbelief. “We told the players,” the owners said. “Put it right there in that durn employee handbook. Players gambling is bad news. Could jeopardize this whole thing we got going on here.”

Of course, this was going to happen.

It will continue to happen.
And not just in the NFL.

Fifteen student-athletes at the University of Iowa and Iowa State University were recently suspended for betting on games, including the starting quarterback for the Cyclones.

Sure, “What the hell is happening in Iowa?” is a legitimate question, but if you think this is an Iowa thing, you’re being naive.

It’s a human nature thing.

And human nature is what Warren Buffett and Charlie Munger are accounting for when they employ their sit-on-your-ass investing strategy.

If Berkshire can sit on $147 billion in cash—roughly the total value of the NFL and its 32 franchises—and avoid stupidity, why can’t the NFL do the same?

Maybe I’m being naive.
Maybe not.

Don’t Play Like a Champion Today.
It's too complex, too vague.

Remember your helmet.
It's specific and simple.

But if you’re thinking it may be too simple, recall Super Bowl XXVI.

January 26th, 1992.
Bills vs. Redskins.

All-Pro Buffalo Bill running back Thurman Thomas began the game on the run, but not for positive yardage. He was on the sideline, frantically searching for his helmet.

(The Bills lost.)

There are lots of ways to succeed in life.
Thousands of line items on the long list of things to do.

But avoiding stupidity—navigating around the most obvious dumb stuff—is a much shorter list.

Focus on those first, with discipline.

You don’t need to play like a champion to succeed.
Just remember your helmet.