How Adam Robinson outsmarts the market, his views on systems and The Great Game

Adam Robinson is the founder of Robinson Global Strategies, through which he conveys his intimate understanding of how financial markets operate to some of the best-known names in the investment industry.

In addition, Robison is a chess master and an entrepreneur, having co-founded ThePrinceton Review after he graduated from Oxford University. The company helps students pass the tests that get them into their dream schools.

His unique but masterful way of looking at the markets and how they operate was the focus of this special edition of Opto Sessions. Over the course of more than two hours, Robinson explored everything from what a trend really is to the philosophy which underpins his approach to life.

 

Listen to the interview:

Apple Podcasts

Spotify

 

Key moments from the show (with timestamps)

• 5.40 – The importance of having a system
• 17.59 – Why I don’t use fundamental or technical analysis
• 26.20 – My approach to investing
• 28.58 – Be playful
• 31.40 – Why does price move?
• 36.32 – What is a trend?
• 47.08 – The notion of confirmation bias
• 53.46 – How do trends begin?
• 1.04.10 – Who is Adam Robinson?
• 1.14.04 – Become detached
• 1.20.56 – Two key things from chess that apply to markets
• 1.29.39 – When different groups of traders disagree about the future of the world…
• 1.38.20 – The inflation narrative of today (3 March 2021)
• 1.52.48 – What is The Great Game?

 

A key lesson that Robinson was quick to impart was also a simple one — before one can really understand and outsmart markets, one needs to develop a system.

“Let me jump in and discuss the importance of having a system,” Robinson told Opto Sessions. “Fledgling investors forget that it's largely a zero-sum game and that when you're making money, someone else is losing it.”

He considers that although this is not always the case, it is a good way to think about investing. “It's like a gladiatorial pit, or mixed martial arts —  that's the way to think about it,” he explained.

“Fledgling investors forget that it's largely a zero-sum game and that when you're making money, someone else is losing it”

 

He said it is for this reason — namely that as an investor you’re up against highly sophisticated and incentivised competitors — that one needs a system with which to approach the markets. This becomes even more important when emotions are high, as they often are when large sums of money are involved.

“You certainly want to outperform because if you don't or if you can't outperform the market, you may as well just stick your money in an index fund and go about your day, right?”

To be one of the anointed few who outperform, Robinsons suggests, one needs a system that others aren’t using. “If you want an edge in the market, you have to choose a system built around your own idiosyncrasies and talents,” he explains.

“We want a system that's different from other people’s, that is tailored to your own strengths and awareness of weaknesses… Every trader needs a system that's tailored to his or her strengths,” Robinson considers.  “And you learn that over time.”

“If you want an edge in the market, you have to choose a system built around your own idiosyncrasies and talents”

 

While a system is integral to outperformance, an investor’s understanding of the mechanics of trends will also help in making decisions.

But, says Robinson, rather than considering trends in the typical sense — for instance, one might learn to focus on the efficient market theory in business school — he likes to frame them in a different way.

“Every trader, every investor, is trying to express a view of the future,” he says.

“It doesn't matter what your decision is — if it's to buy gold, you're expressing a view of the future. Or if it's to short Tesla, you're expressing a view of the future,” he explains. “Your logic or the means of expressing that view can be right or wrong.”

As such, Robinson suggests that all markets are just “aggregating mechanisms for expressing the sum total of all views of all investors about the world”.

A trend, therefore, is “the spread of an idea”, according to Robinson’s view.

“It doesn't matter what your decision is — if it's to buy gold, you're expressing a view of the future. Or if it's to short Tesla, you're expressing a view of the future. Your logic or the means of expressing that view can be right or wrong”

 

“An analogy I like to use is, think about a crowded party … The place is packed, and everyone's having a great time. And unbeknown to everybody, the metal traders — say it was a party of investors — have looked around the room, and they've decided the party is going to end, and they leave. But nobody notices, because there's still hundreds of people having a great time. Then the bond traders look around the room, and they go, ‘Now I'm not feeling this,’ and they leave the party. There comes a moment in every party — and I know it's happened to me — when you look around and it’s beginning to thin out. But in fact, some farsighted individuals realised the party was going to end, and they left early,” Robinson explains.

“That's the way ideas spread — whether it's around Bitcoin, or Tesla, any stock or any asset,” Robinson states.

After an in-depth discussion on how to approach the markets, Robinson concluded on a more philosophical note, discussing the ideas that form his approach to life. He explained that about four years ago, he wrote a book that he hopes to publish later this year, about “The Great Game”.

In his worldview, Robinson believes a good way to approach life is to consider it a game, albeit a very serious one. As such, one should “be playful and enthusiastic, always”.

“When I step into an elevator, I'm excited when the door opens up. I wonder who's going to be in that elevator. I mean, literally, I'm really excited. And when I step into a taxi, I'll strike up a conversation with the driver, and wonder where it'll go and what I'll learn, and have fun in the meantime.”

 

To hear more from Robinson on many of the theories behind how markets operate, as well as providing more details on his investing approach, listen to the full episode here.

Or for more ways to listen:

• Apple Podcasts
• Spotify
• iHeart Radio
• Stitcher
• CastBox

 

Listen to the full interview and explore our past episodes on Opto Sessions.

You can visit Robinson’s website for more details, or follow him on @IAmAdamRobinson.