MasterCard Comes Up a Short

By Sean Hannon, CFA, CFP, of Covestor.com

Isaiah Berlin's essay "The Hedgehog and the Fox" divides thinkers into two categories. Hedgehogs rely on a single defining idea to influence their decision making while foxes rely on multiple experiences and cannot define their thinking into one single idea.

As investors, we are confronted by many different ideas and opportunities. This leads us to often act like the fox as a trading opportunity may be here today and then gone tomorrow. To rely on one single idea to consistently generate returns will lead to frustration. When a good trade becomes crowded, we must move on to our next idea.

At times, the market does allow us to behave like a hedgehog. When these opportunities arrive, we must take advantage. After all, I would rather trade a stock with which I am comfortable and knowledgeable than spend hours searching for the next big idea. ...