Raymond Keene – All About Chess and Finance – interview – Goldstein on Gelt – July 2011

Chess and Effective Investment Strategies Transcription of interview with Raymond Keene
on July 25th 2011. Douglas Goldstein, CFPÆ, Financial Planner
& Investment Advisor Douglas Goldstein: Weíre talking to Ray Keene,
who is one of the worldís most influential figures in the world of chess. He is a grandmaster. In fact, he is one of the first players from
England to earn the title of grandmaster. He has represented his country in eight Chess
Olympiads. He has also written many, many books on chess. Grandmaster Ray Keene, welcome to the show. Raymond Keene: A pleasure to speak to you. Douglas Goldstein: Iíd like to focus a lot
on one of the areas that you study, which is the mind, talk about the intellectual techniques
that a chess player has, and then to discuss how they overlap into other areas, for example
business or investing. Raymond Keene: I think the key factor leading
to success in chess is actually determination to succeed and thatís a common factor in
all areas where an individual has ambitions to get to the top. I think itís actually the key determining
factor, the determination to succeed, and thatís something you can transfer from chess
to business or academics, going after anything in which you want to excel. Now, specifically in chess, there are qualities
that categorized the best players and these are the ability to analyze forward correctly
in your mind and also the ability to assess risk. For example, you may be in a situation on
the chessboard where youíre being attacked ferociously and you have to demonstrate the
correctness of your calculations forward. You have to show that your positioning is
viable and you have to foresee the possible counter attacking potential in the future. There was one great chess player, Emmanuel
Lasker who was world champion from 1894 to 1921. He was Germanic Jewish, a brilliant mind,
a friend of Einstein. He said something that I think is very significant. He said that on the chessboard lies and hypocrisy
do not last very long. Checkmate solves all the problems. Douglas Goldstein: So you started with the
concept of determination. Raymond Keene: Yes. Douglas Goldstein: So the chess players that
Iíve spoken to all certainly are determined, and also a lot of times when I deal with investors
on an individual basis. My day job is that Iím an investment advisor. The radio is only part-time. When I deal with individual clients and we
talk about financial planning or investment strategies, many of them are in fact very
determined to succeed, but how can you apply that and say, ìIím very determined that
the stock I buy should go up.î Raymond Keene: Well, I think thereís a difference
when youíre saying you are determined and being determined, and proper determination
is researched. For example, in chess, nowadays in particular,
itís very, very important that thereís a huge amount of research, often based on computer
analysis before the game. Quite often, grandmasters in top games had
prepared even the first 20 moves of the game in advance through huge research and they
canít predict that they probably will get exactly that on one line. So you have to know all the different branches,
the variations, and the sub-variations in advance, knowing what youíre going to do
is going to be correct and itís based on correct precedent, whatís going to be used,
and if itís been used successfully before. I think itís very applicable to investment. You canít just say Iím going to be determined
to succeed. Youíve got to do researches often. Douglas Goldstein: Youíre talking about how
grandmasters often have the first 20 moves of the game planned. I read the book by Josh Waitzkin called The
Art of Learning. He was the subject of that book and movie
Searching for Bobby Fischer. He said when he started training that he always
learned the endgame first. He was always very anxious to get into complex
situations with his opponents so that he could play them at the end game and excel there. I like that comparison. I always thought in terms of investing because
I tell clients also, ìThink about where youíre trying to go at the end and letís work backwards.î
Do you see a shift in the way chess players have used to study, maybe they study more
the endgame and now they only study the openings? Raymond Keene: In terms of the endgame analogy,
in the past when the theory of the openings wasnít so heavily developed, people could
start towards the endgame that they wanted to get into. But nowadays, initially when the opening worked
out really, really well, there will not be an endgame. You will lose before you get there. Thereís a huge shift towards getting the
card or the position you want in the opening. Itís kind of assumed that anybody who is
a top grandmaster will play the endgame correctly anyway. Often the openings are designed to create
the sort of endgame you want. So the end game is kind of built-in to the
opening and the depth of the research is so profound. Of course, if you want to play a game, you
wonít have the first 20 moves in advance. As I said before, you got to have all the
variations, sub-variations and sub-sub variations within the calculations, but not just ìIíll
look at the first 20 moves.î Itís, ìIíll look at the first 20 moves and all the deviations
there from along the line as well.î You must know the sort of things your opponent has
done in the past. So on the databases where your opponent may
have up to 2,000 games in the public domain in the database, you can look at these and
you have to decide which one you would have tried to force him into, whether thereís
an error or a blemish in his analysis that you can explore when you come to plan. Itís an enormously complex procedure, and
I think this must be the same with investment ability. You canít invest nowadays just from the win. Youíve got to do a huge amount of preparation,
a huge amount of research, a huge amount of analysis and forward planning before you can
make a decision as to where to go. Douglas Goldstein: Weíre talking with Grandmaster
Ray Keene, who is one of the top chess players in the world. Certainly, he has retired from competitive
chess after representing England in eight Chess Olympiads. He was one of the first people in England
to win the grandmaster title. He has been talking to us about certain comparisons
between chess and investing. One of the things I want to touch on is what
you said earlier that chess players have to be excellent at assessing risk. So one of the things that I found as hardly
a grandmaster but as a chess player mysel, is that sometimes assessing the risk is difficult,
because you canít even see it coming. Clients will say the same thing about the
market. Theyíll say, ìHow could I have really seen
the real estate crash coming up or the internet crash coming up?î I think the fact is itís
true. Itís very difficult to see that. How can someone train himself to become a
grandmaster of assessing risk? Raymond Keene: Thatís a very good question. One of the things Iíd like to interject at
this point is that when I was very active in playing the tournaments, I had a lot of
kids, chess pupils of mine and I donít know whether youíve noticed the names of people
like Ali Morton and David Morewood. David Morewood is a grandmaster. There has been a tremendous trend in English
chess circles in the past 20 years for kids who are very good at chess not to make a career
in chess but to make a career in finance and investment. I held a big party last year for Garry Kasparov
and I said he can see all the experts of chess in London. The number of people who are now top financial
experts and wizards in the city whoíd been very promising chess players in their youth
who attended this event is quite extraordinary. So I think there was a huge correlation between
expertise and chess since early age and potential expertise and investment. Now to get back to the risk question, I think
this is very, very difficult, but I think what a chess player tends to do is to have
a plan B. So you think right. If everything goes well, itís going to go
like this ìDoink, doink, doink, doinkî player will then end game, checkmate. But what if it goes badly? What if things turned badly up? Well, I think the answer there, of course
this is my personal answer, is to try to develop a strategy where if you do it wrong, you can
see the often hidden opportunities that arise like total disaster. So you develop a strategy thatís flexible
enough to take advantage of the particular factors that arise when things go exactly
diametrically opposite from what youíd like them to do. Itís very interesting that in many cases
what looks like a complete and total disaster, in some other factor, should be quite good. If I can give an example, youíve probably
been following The Phone Hacking Saga with Rupert Murdoch in the News of the World in
the U.K. Many people have been saying, ìOh God! This is disaster for the Murdoch Empire, itís
absolutely terrible and it will fall apart.î In fact, the shares of the corporate today
rose by 6%. I think what happened is that thereís been
a long struggle in the U.K. between private news media like Murdoch and the BBC, which
is state-funded. The BBC is notoriously left wing. They have a left-wing agenda and theyíre
all completely safe from market forces. Theyíre paid for by the public whether you
want to watch them or not. An inquiry was announced by David Cameron,
our prime minister, last week into press practices. This was clearly aimed at Murdoch News Corp
and so on and so forth, but I think that the unintended consequences of this and the opportunity
for Murdoch is that it now allows when the time comes to the inquiry for the folks aimed
at the BBC instead because they claim Murdoch is dominating the British news, but in fact,
if you look at it, itís the BBC that dominate the British news and by a far greater percentage. I think the unintended consequence and the
hidden potential of the Murdoch News Corp and all these is that people now realized
that the inquiry is going to stop looking at the BBC and its domination of national
news. I think thatís one of the reasons that the
News Corp shows roughly like 6% yesterday. In any disaster scenario, look for the silver
lining where the hidden opportunity or the way to explore when things go wrong and turn
that to your advantage. I think thatís very typical of a very good
chess players that even when things are horrendously wrong, theyíll look for the small crumb of
comfort that they can twist to their advantage and explored in that direction. I should point out that I do have shares in
the company which is owned by Rupert Murdoch. Douglas Goldstein: Thank you for sharing that. So is Rupert Murdoch himself a chess player? Raymond Keene: Well, I went to see him in
early 1990s and I talked to him about sponsoring the world chess championship match with Garry
Kasparov and Nigel Short, but I know his son James Murdoch is a chess player. I think again going back to business, one
of the criticisms meddled against the Murdoch papers is that they are too liberal, too sensational,
with too many naked women, too many scandals. I think by sponsoring the world chess championship
in 1993, it was a very clever business move. It had News Corp heavily behind one of the
worldís most intellectual activities. So itís a useful financial and media counterweight
to the perceived opinion of the whole country being a little liberal. Douglas Goldstein: Good strategy. Weíve been talking to Grandmaster Ray Keene
who is one of the first English people to earn the grandmaster title. He has also written over 140 books on chess. Weíre just about out of time, but Ray maybe
you could just tell people how they can track some of the work that youíve done and keep
up with what youíre doing now. Raymond Keene: Well, itís very simple. I Twitter every day, I tweet. Itís @Times_Chess to get more tweets. I write everyday in the Times. You get the Times online. Youíve to subscribe of course but it doesnít
cost very much, but if you get paper copies of the Times, itís there. I also write on the Sunday Times every week
and in the Spectator. Of course, you can get my book on Amazon or
any good online store so if you want to get any of my 140 plus books, go ahead. If you like to read me every day, read the
Times and if you want to follow my tweets, go to @Times_Chess Douglas Goldstein: Super. Grandmaster Ray Keene, thanks very much for
joining us. Raymond Keene: Thank you. Douglas Goldstein, CFPÆ, is the director
of Profile Investment Services and the host of the Goldstein on Gelt radio show (Monday
nights at 7:00 PM on www.israelnationalradio.com. He is a licensed financial professional both
in the U.S. and Israel. Securities offered through Portfolio Resources
Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services
LLC. Member NYSE/SIPC, a Fidelity Investments company. His book Building Wealth in Israel is available
in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788
or (03) 524-0942. Disclaimer: This document is a transcription
and/or an educational article. While it is believed to be current and accurate,
divergence from the original is to be expected. The original podcast can be heard at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely
information and should not be used as the sole basis for making financial decisions. The opinions rendered herein are those of
the guests, and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd.,
or Israel National News. Readers should consult with a professional
financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/.

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