The Most Certain Way to Be Wrong in Investing Is to Be 100% Convinced That You Are Right

by gmishuris

The most certain way to be wrong in investing is to be 100% convinced that you are right.

Early in my investing career, I was a junior analyst at one of the largest investing firms in the world. A senior analyst had a recommendation that he felt certain about. He couldn’t see how it could go wrong. He published a research note to the whole firm basically saying that anyone who didn’t invest in his idea didn’t deserve to be a PM.

How did the investment work out? It turned out to be a fraud.

Always balance your well-reasoned conviction with seeking out alternative/opposite viewpoints and keep an open mind to the possibility that you are wrong. Remember – the best value investors get ~ 60% of their investments right. So if you own 10 investments in your portfolio, there is a pretty good chance that you are wrong on 4 of them. Go and try to find those 4 before they cost you money.

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