ArjunGaur @ArjunGaur: "The Most Complicated Simple Problems 1...."

United Kingdom

The Most Complicated Simple Problems 1. Investing “Investing isn’t complicated. You just buy stocks when they sell for less than they’re worth.” “How do you know what they’re worth?” “That’s complicated.” Einstein said everything should be made as simple as possible, but no simpler. I’ve learned the latter part the hard way, realising that it’s often hard to tell the difference between two simple but opposite views. 2. For Example It’s hard to know the difference between “I was wrong” and “The odds were in my favour but it just didn’t work out.” You can’t learn from a mistake unless you can accurately identify a mistake. But doing so is easier said than done. An investment that soured could have been a mistake, or it could have had a 90% chance of success with great return prospects, but unfortunately stumbled upon the 10% chance of things going wrong. The problem is we rarely know the exact odds of success of our decisions; we can only make educated guesses, and those guesses are influenced by how we want the event to turn out. This creates two challenges: Sometimes we make terrible bets and think we just got unlucky, and sometimes we make excellent bets whose unfortunate outcomes discourage us from pursuing them again. 3. Patience vs Inertia It’s hard to know the difference between “Be patient” and “Change your mind when the facts change.” All worthwhile investments are cyclical, so capturing long-term returns requires patience through difficult times. Then again: Ninety-six percent of companies go out of business within 10 years, and even about 40% of established public companies at some point lose most of their value and never recover. Blindly saying “Be patient” isn’t safe in a world where most stuff eventually breaks for good. You should change your mind when the facts change. But by the time we can tell whether something is a changed fact or just a cyclical downturn, it’s often too late. The same people who are lauded for holding firm on Amazon during its dark days could be criticised for being patient with General Motors during its fall. The solution is Diversification and an acceptance of some degree of Loss, but along the way you’ll constantly question whether you’re dealing with a normal cycle or the beginning of the end. 4. Blindspot Barrier It’s hard to know the difference between your viewpoint and the complete viewpoint. Someone once described Donald Trump’s personality as, “Unable to distinguish between what happened and what he thinks should have happened.” I think all of us suffer from this to some degree. Everyone needs to tell themselves a story about how the world works, and the path of least resistance is to tell yourself a simple, logical story based on what you’ve personally experienced in life. But since all of us have only seen a tiny fraction of the world, we fill in the gaps of what’s unfamiliar with what we know. “The recession occurred because [this specific thing I’m familiar with].” “The company failed because [this specific interaction I had].” Trying to accurately explain 100% of something you’ve only experienced 0.0001% of is as difficult as it is prevalent. 5. Conclusion How to navigate this Complicated Investing - Simple - Rather than betting on one business over and over again, how about getting creative and finding Long Term Great Opportunities like $STZ (Constellation Brands Inc.) $SVV (Savers Value Village Inc) $BSAC (Banco Santander Chile-ADR) $UI (Ubiquiti Inc) and $MOG.A (Moog Inc) www.brainyquote.com/photos_tr/en/h/hlmencken/129796/hlmencken1-2x.jpg I welcome you all to look at my Portfolio and add it to your Watchlist >> I look forward to growing with all of you : )

5 Mentioned

STZ

Constellation Brands Inc.

SVV

Savers Value Village Inc

BSAC

Banco Santander Chile-ADR

Ubiquiti Inc

MOG.A

Moog Inc