There are at least two kinds of games: finite and infinite. A finite game is played for the purpose of winning and must come to a definitive end, such as football. There are known players, fixed rules, and an agreed upon objective. An infinite game is not bounded by time and the objective is not winning but ensuring the continuation of play. The rules may change, the boundaries may change, even the participants may change. An infinite game continues with you or without you, like business or politics or life itself.

The dynamic is stable when you have a finite player in a finite game or an infinite player in an infinite game. The challenge arises when we play with a finite mindset in an infinite game like the stock market. Finite play in an infinite game is inherently contradictory.

“Long run is our firmest support as we peer into the darkness that lies ahead,” wrote financial historian Peter Bernstein. Finite players, however, alleviate anxiety of an uncertain future by focusing on scoring wins in the short run, where nothing ever stands still.

It is the impulse of a finite player to always be trading, getting drawn in by shifting prices and new trends. They feel like they don’t have a choice. Whether it is internally motivated or the result of external pressure, whatever they do they must do.

James Carse, the author of Finite and Infinite Games, explains it as follows: “Finite players veil themselves because of a belief that they will be seen as losers if they do not play. It may be that we often care too much about what other people will think of our decision to not play.” Over time, they inevitably race through the resources and will to stay in the game. As we see, a record number of established hedge funds are shutting down.

On the contrary, an infinite mindset knows there is winning and losing. Sometimes you’re ahead of the market, other times you’re behind. The goal is to constantly improve and keep the torch burning. In an infinite game, the only true competitor is yourself. Therefore, an infinite player accepts uncertainty as the norm, embracing surprises, maintaining positivity, and not seeing any particular result as final, which yields humility.

Warren Buffet is arguably the best infinite player of all time. He bought his first stock at age 11 and launched his investment partnership in 1956, when he was just 25-years old. But he was wise enough to set his own ground rules: he charged no management fee, took 25% of any gains beyond a 6% hurdle, and agreed to personally absorb a percentage of any losses. Buffett told his investors, “I’ll run it like I run my own money, and I’ll take part of the losses and part of the profits. And I won’t tell you what I’m doing.” He even stated, “If any three-year or longer period produces poor results, we all should start looking around for other places to have our money.”

Buffett delivered strong returns for over a decade, but in 1969 he decided to wound down his partnership. He could no longer find suitable investments. He disclosed being “out of step with present conditions,” and that he had no desire to grope around hoping to get lucky with other people’s money. “I am not attuned to this market environment,” he said to investors, “and I don’t want to spoil a decent record by trying to play a game I don’t understand just so I can go out a hero.”

As an infinite player, Buffett was aware of the absolute freedom of the infinite game. He knew that he can always quit and come back to play at any time of his choosing. The game will always be there. The key was not to budge from his underlying principles of value-driven, commonsense investing. Survival is everything in an infinite game.

Buffett returned to investing not long after and went on to build the most impressive long-term track record in investing history. Though he admits to be struggling in recent years, what is incredible is that he has still shown the resilience to thrive in an ever-changing world, while his competitors fell by the wayside.

Borrowing from author Simon Sinek’s framework as described in his book, The Infinite Game, we can make a few distinctions on what it takes to play successfully in the stock market over the long run.

First, you must have a “just cause” or an inspired purpose—the object of play should be about more than just making money. Second, you need trusting teams and clients, with an alignment of values and vision. This is a lot easier said than done with rising fee pressure, mounting regulatory scrutiny, and shackles imposed by institutional investors.

Third, and most important, existential flexibility. When your entire business model is challenged, you must be willing to blow up your business to advance your just cause.

That means, asking the question, am I suited for this market? Is my skillset, strategy still relevant? If I had to start over again, what structure would allow me to perform at my most optimal level? Remember, the only true competitor in an infinite game is yourself.

And lastly, it takes great courage to do all of the above. The pressures around us are overwhelming and the ability to adopt an infinite mindset, we think, will determine how long you stay in the game.

Know this.

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