What Admiral Nelson Knew About Risk and Reward
The age-of-sail tactic that's really a lesson in trade asymmetry
Have you heard of HMS Victory?
It was Admiral Nelson’s flagship vessel, the jewel of the Royal Navy in the 1800s.
Think wooden sailing ship with cannons…
And I’ve been thinking about how they actually fought these battles, and how trading is not too dissimilar… (yeah I know, I need to get out more.)
ADMIRAL NELSON
So, most people assumed the two ships in battle drew alongside each other and just blasted the shit out of the cannons, hoping they came off best…
But actually, that wasn’t the objective.
In fact, if you were in that position you’d better pray your gunners had not been swigging too much rum… Because one lucky shot from the enemy and you were done for.
No, the real game was position.
The captain wanted to manoeuvre so they were angled across the opponent’s bow or stern.
From that position they could blast away at will across the length with very little fire coming back at them.
A perfect scenario.
Captains would do what they could to steer the ship into this position; meanwhile, gunners had to stand by, waiting for the precise moment to fire. Not wasting valuable ammunition on pot shots, but being patient to wait for the exact moment when the odds were completely on their side.
An asymmetry of;
“If we hit them hard and break the mast, we win; if we don’t, we live to fight another day”
Sound familiar yet?!
You can see where I’m going…
That’s the trade.
We’re not trying to win the slugfest.
We’re trying to angle into a position where we’ve got little to lose and a lot to gain, and only then do we fire.
We might not hit the mast; we might not get the perfect outcome. But we don’t get destroyed either.
We live to fight another day… we sail on and look for the next position.
Compare that to piling into trades with so much downside that a single loss can take the whole ship down. Or a 50/50 shot with no asymmetry that comes down to pure luck…
You might get away with it a few times, but do it enough and, well, your luck runs out.
Nelson didn’t rely on luck; he got into position to give asymmetry a chance to play out, and then he struck.
Worth thinking about, Captain.