In every game there are always two games being played. One is the game itself. The other is the game about the game. This is called the metagame.
The metagame can be thought of as the optimal strategy to win a game at a specific point in time. As conditions within the game change and as player responses to those conditions change, so does the metagame.
A simple example of metagame evolution is the increasing number of 3-point shot attempts taken within the NBA. As the chart below illustrates, the number of 3-point attempts per game has slowly increased since the 3-point shot was introduced in the 1979-1980 NBA season:
Though nearly all the rules of basketball are the same today as they were in 1979, the strategies around those rules have changed. This is the metagame evolving over time. A new rule is introduced and eventually exploited.
Every game has an underlying metagame. But, unless you are prepared to become obsessed with that metagame, I recommend that you ignore it altogether. In other words, go all out or don’t waste your time. Those are your only two options. Let me explain.
What the Wise Do in the Beginning, Fools Do in the End
When it comes to the metagame, only the most dedicated survive. Therefore, if you aren’t putting in the effort to watch and understand metagame evolution in real time, you will underperform.
Consider someone trying to build a popular account on Twitter. If you have been watching closely, you will recognize that the Twitter metagame consists of:
- Taking jabs at popular accounts that you don’t agree with. (I’m guilty of this)
- Creating Twitter threads that are informative, entertaining, and/or emotional. (I am also guilty of this)
The underlying principle of Twitter metagame is the same as on every other social media platform—keep people engaged and on the platform. The more you do this the more the platform rewards you. And both of the principles above (among others) support this metagame.
My friend Sahil Bloom demonstrated this wonderfully after creating and organizing a collection of informative Twitter threads that amassed him over 400,000 Twitter followers in less than 18 months. The key to his success was recognizing the metagame (i.e. write good Twitter threads) and then taking it to the next level (i.e. organize your threads to keep people engaged longer).
Sahil was on the cutting edge here, but I have since seen other creators copy this method. Whether or not those other creators will succeed by using this strategy remains to be seen. Maybe Twitter threads will remain great for growth or maybe the metagame will evolve. I’m not sure.
Either way, this reveals a harsh truth about the metagame—early players get rewarded, but later players may not. Or as Warren Buffett once said, “What the wise do in the beginning, fools do in the end.”
The worst thing you can do is run head-first into a metagame that is reaching exuberance. So, if you already thought 5 or 6 times about taking a trade, weeks/months have passed, and you have finally plucked up the courage to do it: you’re probably too late. It doesn’t feel risky anymore, which means it’s probably maximally risky.
The same is true in Twitter or any other game.
For example, if you went to a top 10 university a decade ago, the career metagame was to go into management consulting or investment banking. However, in recent years this metagame has changed such that graduates from top universities are now joining big tech companies (i.e. FAANG) or tech startups. And now with everyone talking about web3, maybe future graduates will join DAOs instead of traditional centralized organizations. Once again, I’m not sure.
Either way, those who recognize the metagame evolution earlier will earn larger rewards than those who come later. The same thing happens in investing when market anomalies are found and exploited until they no longer generate alpha. At that point the metagame changes and the players move onto the next profitable factor or anomaly.
This is why you have to become obsessed with the metagame if you want any chance of succeeding. But this is easier said than done, which is why I recommend the opposite approach—ignoring the metagame altogether.
Why Ignorance Beats Obsession
If you want to get good at the metagame you will have to work hard and outcompete all of your fellow players. But both of these conditions are undesirable. After all, who wants to work hard playing someone else’s game? And who wants to do it against the best and brightest out there? Not me.
This is why I agree with Peter Thiel’s argument that competition is for losers. Competition faces you off against others in a game where you may not have any particular advantages. Therefore, wouldn’t it be better if you ignored the metagame altogether and built a personal monopoly based on your relative strengths instead? Doesn’t a career (and life) uniquely suited for you sound better than one that others have chosen for you?
In other words, would you rather be the best version of yourself or a decent version of someone else?
This is why it makes no sense to compete when your time could be better spent on other endeavors.
I’ve used this same line of thinking when arguing why you shouldn’t pick individual stocks. Picking stocks, like all active investing, is following the metagame. And most people would be better off if they didn’t follow the metagame (i.e. went passive) and did something more productive with their time.
So as you think about how you want to use your time in 2022 and beyond, ask yourself: Am I willing to put in more time and effort than everyone else playing this game? Is this the game I even want to play?
If your answer to either of these questions is “No”, then you should find a new game. After all, you only live once. So don’t spend it playing a game you don’t want to play.
Happy investing and thank you for reading! If you want to learn more about the metagame, I highly recommend this post from Cedric Chin.
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This is post 275. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data