What Do When You Are Wrong
Originally published on Wednesday, March 6 at 1:28 p.m. EST. I have a little poem I'd like to read in honor of the occasion of being wrong on the markets since mid-January. And I would like to provide a checklist of things to do when things go different than one's baseline expectation. If I may ... and Spaulding, get your foot off the boat.
"It's easy to grin when your ship comes in / And you've got the stock market beat. / But the man worthwhile is the man who can smile /When his shorts are too tight in the seat."OK, Pookie, do the honors! Here is my checklist when things go differently than I expect in the markets.
- Judge Elihu Smails, Caddyshack
- Most importantly, spend some time objectively re-evaluating one's investment thesis.
- Be honest with yourself, challenge yourself.
- If conditions have changed, change your investment strategy.
- Seek counsel from smart investors you know and sit down and discuss your thesis and get his/her feedback.
- Take 10 deep breaths and do nothing for a while. Like Being There's Chauncey Gardner ... just be there and watch.
- Try to stay balanced emotionally. (Physical exercise is usually a good idea. So is a good book).
- Speaking of books, go back to your library and do some homework by reading about the legendary masters and their investment methodology.
- Do not double down or average up until some time elapses and you have enough time to settle down, analyze your positions again and get input from others.
- Lastly, if you conclude your currently wrong-footed investment position will prove accurate, do not be dissuaded. Stand firm in view.