Long before behavioral finance had a name, one book was already laughing at it. The Money Game (1968) is Adam Smith’s first-person tour of Wall Street’s go-go years — a bull market so manic that otherwise sane men started believing their own tips. It is the funniest serious book ever written about investing, and sixty years on, its diagnosis of the investor’s brain has not aged a day.
Book Summary
“Adam Smith” was the pen name of George J.W. Goodman, a Harvard-and-Oxford-educated financial writer who spent the 1960s inside the machine. The Money Game reads like a novel because it is one man’s lived experience: the trading desks, the cocktail-party stock tips, the analysts who talked themselves into brilliance on the way up and into excuses on the way down. Smith’s great insight is that the market is not a mechanism but a game, and the players’ minds are the board it is played on.
The chapters have become Wall Street folklore. “The Gnome of Zurich” profiles the currency speculators who moved millions on instinct. The chapter on Warren Buffett — “The Mysterious World of Warren Buffett” — was one of the first national profiles of the Omaha investor, written when Buffett was still a relatively obscure partnership manager in his thirties, and it reads today like a time capsule: the temperament and patience were already fully formed. Smith’s running metaphor is the croupier: in the money game, the house always takes its cut — commissions, spreads, fees — so the players start each round a little behind.
Running underneath the humor is a serious thesis, borrowed from Keynes: markets can stay irrational longer than you can stay solvent, and the investor’s real opponent is never the market — it is himself. Smith watches smart men fall in love with their positions, confuse a bull market for brains, and invent stories after the fact to explain luck. The Money Game was describing overconfidence, hindsight bias, and narrative fallacy decades before psychologists gave them names.
Who is Adam Smith?
Adam Smith was the pseudonym of George Jerome Waldo Goodman (1930–2014), who chose the name of the great Scottish economist as a joke that stuck. Goodman graduated from Harvard, studied at Oxford as a Rhodes Scholar, and wrote about money for New York magazine, The New York Times, and Institutional Investor. He was an insider who wrote like an outsider — a participant-observer of finance in the Hunter S. Thompson sense, minus the chaos.
Goodman followed The Money Game with Supermoney (1972), a sequel covering the hangover years, and went on to a long career as a novelist, television commentator, and economics writer. He understood something most financial writers never learn: that the numbers are the least interesting part of markets, and the people are the most.
Lessons From The Money Game
The croupier always wins. Every trade has a cost — the broker’s commission, the bid-ask spread, the fund’s fee — and those costs compound against you. Smith’s point anticipates the entire index-fund argument: the less you pay the croupier, the more of the game you keep. For a modern echo, pair this book with Burton Malkiel’s A Random Walk Down Wall Street.
A bull market makes everyone feel brilliant. Smith’s funniest passages are also his most useful: men who mistook a rising market for personal genius, then discovered — on the way down — that the genius had been the market all along. Any investor who has lived through a mania should read this as a vaccine.
Temperament beats intellect. The Buffett chapter is the book’s quiet center. Buffett’s edge, even then, was not superior analysis — it was the ability to sit still, to ignore the crowd, to treat Mr. Market’s quotes as opportunities rather than verdicts. Smith saw it in 1968; the next sixty years confirmed it.
Stories are the investor’s native drug. After every move, the players invent a story about why it happened. Smith treats these stories as entertainment, not information — an instinct that modern investors, drowning in financial media narratives, would do well to copy.
Criticisms of the Book
The Money Game is journalism, not instruction: readers looking for a system, a strategy, or actionable advice will find anecdotes instead. Some of the 1960s color — the specific stocks, the long-gone brokerages — reads as period piece, and the breezy tone occasionally glides past questions a more rigorous book would stop to answer. It is also, necessarily, a book about a bull market; the psychology of the bear gets less attention.
Who is This Book For?
For investors who want to understand the oldest edge in markets — self-knowledge. It is the ideal companion to the heavy texts: read Benjamin Graham for the method, then read The Money Game to understand why knowing the method is not the same as following it. Anyone who has ever checked a stock price more than twice in a day will recognize themselves in these pages, and recognition is the first step.
Final Thoughts
The test of a market book is whether it survives the cycle it describes. The Money Game has now survived half a dozen of them, and each new mania makes it feel more current, not less. The tickers change; the croupier’s cut, the cocktail-party tips, and the genius factory of a rising market are permanent features of the game. Read it to laugh, then read it again to learn — the second reading is where the lessons hide.
