Saul, occurs to me that one of your traits has been very important to your investing success and that is your temperament. You think differently. Several times you’ve indicated that it never “occurred” to you to worry, say about a stock that does well after you sell. I am curious as to whether you think this is an innate trait, or if this is something that arose out of your training as a physician, or something else?
I think you have developed a large following because you are so different, and temperament is a part of that difference. Of course the first step is realizing that one can approach things differently. Realization is a necessary step but it needs to go well beyond that and really becoming comfortable, so that in moments of stress you don’t depart from the espoused method.
I think most intermediate investors are quite capable of following your analytical methods. And I encourage anyone who hasn’t looked at the knowledge base to do so. I think self reliance for the analytical work is so important for confidence in any investing decisions made. I’m not sure you have anything more to add on this topic, but if you do I think we’d all be interested to hear it.
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Saul, occurs to me that one of your traits has been very important to your investing success and that is your temperament…I think you have developed a large following because you are so different, and temperament is a part of that difference. Of course the first step is realizing that one can approach things differently. Realization is a necessary step but it needs to go well beyond that and really becoming comfortable, so that in moments of stress you don’t depart from the espoused method… I’m not sure you have anything more to add on this topic, but if you do I think we’d all be interested to hear it.
Thanks Flygal, I’m not sure either I have much concrete that I can add about it, but I always have had that different temperament. How about this? being left handed, when most everyone around is right handed, as a way of learning that you don’t have to be the same as everyone else, as well as other situations in which you are a minority, as a way of learning it’s okay to think differently. Just totally guessing here.
Best,
Saul
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I would add that it is my opinion that Saul does not suffer from the need to be right that afflicts so many investors and impairs decision making. The unfortunate truth is that we are all human and making mistakes and errors in judgment comes with territory.
The need to be right first inhibits the recognition of having made a bad decision in the first place. And even after a bad decision becomes apparent, it stands in the way of taking corrective action.
Saul has an uncommon ability to objectively examine past actions and quickly recognize when and where a mistake has been made. He does not hesitate to sell at a loss if he determines that it was a bad decision that led him to make the investment.
It can be very difficult to admit to oneself that you’re wrong. The desire to hold a losing position because you’re certain that it will turn around is all too common. One of the most appealing things about the buy and hold mentality is that it insulates you from ever having to admit an error in judgment. If I just keep it, it will eventually prove profitable.
Of course the problem here is even if that proves true in a few cases, you have sacrificed the opportunity to make money elsewhere for the duration of the holding period until the stock finally turns around. And worse still, the few successes tend to be remembered while the failures get pushed to the background thereby reinforcing the notion that a bad decisions will eventually turn out to be winners if held long enough.
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Saul has an uncommon ability to objectively examine past actions and quickly recognize when and where a mistake has been made. He does not hesitate to sell at a loss if he determines that it was a bad decision that led him to make the investment…
or if the original decision was okay, but now things have changed.