Chess move by move

CNBC had a story about 2 months ago on Warren Buffett's Top Three Investment Rules for the Average American, among other things, he discussed the benefits of playing Bridge.
"In bridge, everything anybody does or doesn't do, you're drawing inferences from, including your partner and your opponents. You're working with a partner. If you don't work well with partners you're not going to have a winning bridge team over time. And everything you've learned from the past has some utility on the next hand you play. The next hand, you've never played it before and you'll never play it again in your life. But on the other hand, the problems you've solved in the past are useful in solving the problems there. And you have to keep paying attention all the time. You can't coast."

Let's breakdown the benefits and see if Chess measures up:

"In bridge, everything anybody does or doesn't do, you're drawing inferences from, including your partner and your opponents."
I do not play bridge, but from the little I have gathered, you do not always start with the same "hands"? In traditional Chess on the other hand, the starting position is the same. When you consider Chess960, on the other hand, the starting positions will change, so in a way, you are dealt a different hand? It seems to me that in Chess, there is less inference from what a person is doing or not doing. In Chess all the pieces are in front of you, you can pretty much tell the options that your opponent has. I am not sure how "forcing" Bridge is. Can a bridge player say, I was forced to play that particular "move" or "card"? Chess on the other hand, positions are reached, sometimes from the very beginning, when one of the players is forced to make certain moves. It is "forcing". How is this related to investing? Well, I think that before you invest, you usually do an analysis or evaluation of the company you want to invest in. The Financial Statements are right in front of you. The notes to the Financial Statements themselves are not Gospel, there contain some estimations and "judgment calls", there are Standards that can be followed without necessarily giving out all the information. The fact that "all" the information is right in front of you makes Investing more like Chess. The fact that you look at what's in front of you, and what's going on in the market, and draw conclusions from there, makes it similar to Chess. The guessing aspect of how the future may turn out, is common to both Chess and Bridge. I think that if you are "good", the results of Chess player may correlate more to those of a good investor, [than those of a good Bridge player.]

"You're working with a partner.If you don't work well with partners you're not going to have a winning bridge team over time." Chess is an individual game. You may get help from a coach, some friends, or your computer while you are preparing, but when it comes to game time, you are always alone fending for yourself. It is self-interest and survival of the fittest at its best. How does the collaboration during Bridge work? Can a team mate convince you to play in a particular way? I should point out that, I believe, with this point, Buffett was emphasizing the importance of having good relationships or the ability to work in a team environment - and how that is an important factor in being successful in life and investing. You cannot argue with that. Almost all highly successful people have a team of friends, family, acquaintances that helped them along the way. Even in Chess, one plays with a lot of people along the way, and some become life-long friends and business partners. I am wondering if Chess as a game is a zero-sum game whereby if you have edge or some information that may help you win, you are bound to keep that to yourself until you use it. If you share it, then you may not effectively use it to your advantage during a game. Every new information gets added to the knowledgebase for all to see, and then he who has superior advantage in some way (talent, memory,preparation...) will win. Bridge on the other hand, is not static, probably every game is different? I have seen books on Bridge. Is there opening theory with opening names, middle game, and ending? Is there something like Rook versus Bishop?

"And everything you've learned from the past has some utility on the next hand you play." Much more so in Chess. I am not sure what this has to do with investing. Is it that the information you gather before investing affects your investing moves? Or is he referring to life after you invest? The latter does not make sense, especially in the way he invests, value investing. Since he invests for long term, then his past moves do not have some utility on the next investment. May be it does... if you consider that you have made a good investment, you are getting some returns, and then you are reinvesting those or buying up new stock with those returns, or even consuming whatever you get. Some utility there. May be. If he was talking about life in general, all our actions have some consequences, good or bad. You reap what you sow. Whatever the case, in both Chess and Bridge, "And everything you've learned from the past has some utility on the next hand you play."

"The next hand, you've never played it before and you'll never play it again in your life. But on the other hand, the problems you've solved in the past are useful in solving the problems there." I had debated whether to separate the last sentence (discussed in the paragraph above) from the sentences being discussed in this paragraph. What settled it is the fact that in Bridge you will/may never have the same hand ever again! In Chess, we some times (almost) play a game all over again at different times in our career. I would like to think that Chess then, other than Bridge,is similar to investing than Bridge. If you read the financial statements of a particular company, you may think, "I have seen that before" or "I have read that before". In addition, if you are doing an analysis of a company to see if you should buy its stock, you will probably have some criteria that have to be met. You may say, I want to the Debt to Equity ration to be less than 0.2. or Current Ratio to be greater than 5, whatever. As you analyze hundreds of companies, some things will start repeating themselves and your decisions will almost be already made. I know it is putting it very simply, but in general terms, that is how it works. Of course, Buffett has mentioned about buying companies that have a sustainable competitive advantage, and that can be seen through consistent numbers year after year as you do your analysis. Thus, it appears to me that investing is more science than "luck" or what you are dealt, and thus it is more similar to Chess than Bridge. I have already discussed using past experiences and knowledge as you make your present and future decisions, so I will not revisit that.

"And you have to keep paying attention all the time. You can't coast." Need I say more? Without having played Bridge, I cannot tell how much more attention is required in Bridge compared to Chess. I would like to say that Chess requires more attention that Bridge for this one reason: if people are talking and discussing their next move/play/hand during the game, there may be some distractions going on there. We all know that in Chess collaboration and/or noise is not allowed, which gives the impression that the utmost attention is required at all times. I know that I may not have given Bridge its fair shot because I do not play the game. Warren Buffett did not say that Bridge is better than Chess. This was just to revisit the virtues of Chess
through the lenses of Bridge.

Here is the CNBC story: Warren Buffett's Top Three Investment Rules for the Average American http://www.cnbc.com/id/31849504

Here is a link with some things Warren Buffett said about the benefits of playing Bridge. Of course, it is at a Bridge website, and he sponsors the cup: http://www.buffettcup.com/BuffettonBridge/tabid/69/language/en-US/Default.aspx

Here is a link with a some debate on Chess v Poker: http://www.wallstreetoasis.com/forums/chess-vs-poker