Stupid in Small

Stupid in Small

I once heard a story of Warren Buffett playing golf with Bill Gates and their group of friends, not sure if it is a true story, but I found the story behind it very powerful. And also, personally I don’t play Golf so please pardon me if certain terminology is inaccurate. The group of friends came to the Par 3, which is apparently the one which has the highest chance of scoring a Hole In One (hitting the ball into the hole with just one stroke.) Warren got into position to take his turn when one of the friends called out “Hey Warren, just have a bet. If you hit a Hole in One, I will give you $20,000!”

Warren turned and ask, “And if I miss?”

“Well… if you miss, you pay me $20.”

Warren thought about it for a second and said, “Bad odds, no deal!”

The group was shocked that Warren would not take up the bet. After all, he was risking $20 for $20,000.

They questioned, “What do you mean bad odds?”

Warren replied, “The bet is $20,000 is to $20 which means the odds is 1000 to 1. But that chance of me hitting a hole in one is less than 1/1000, so bad odds, NO DEAL.”

Bill Gates went to Warren Buffett, “Come on Warren, you are a billionaire and it is only $20. Can’t we have some fun?”

Warren’s reply was very profound, he said, “Stupid in Small, Stupid in Big”. To Warren, if you are stupidly manage a small sum of money, you will be stupid in managing big sums.

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