Being wrong is not a weakness, it is a strength


I feel like I’ve caught my eye on a few sharp sticks over the past week. I’m not talking about my positions, some of them treat me worse than that, but when it comes to tweets or emails received. It seems if I don’t recommend your actions (not you, reading this right now, but a more generalized you) then I’m an idiot. Or if I don’t adopt your style then, again, I’m an idiot. Or another period. Or a specific asset class. Or, well, you get the point.

And while I might be an idiot, it’s for other reasons. Ironically, if opposing views weren’t there, we wouldn’t have much of a market. Idiots, like me, are necessary for the geniuses of the world to prosper.

The hard truth is that most people react before taking the time to understand another person’s opinion or point of view, unless that person’s opinion matches theirs. Then all is well.

It’s not just with stocks, but anything of value. Last weekend I saw a tweet in which the person ironically bragged about “hacking” NFTs using the record command under the right click and now his wallet was worth 8 trillion dollars or something ridiculous. In a tweet, I realized that this person had done absolutely no research on NFT beyond reading from people who probably share the same myopic view.

Why are we inclined to do this?

In my opinion, we hate to think we are wrong about anything. It is seen as a weakness. Ironically, it is a force. The best traders and investors I know openly admit a mistake. They are learning from it. And, above all, they move away from it rather than dwell on the past.

In addition, there is jealousy in some cases. It can be hard to see other people succeed, especially if the way they make money doesn’t speak to you. Worse yet, if you see them as “below” or less intelligent than you. It can be difficult to see new people coming into the market and making huge sums of money, taking uncontrollable risks and breaking all the rules. However, most investment rules are statistical probabilities spread over long periods of time. It’s like sitting at a blackjack table and hitting 20 hands in a row that you win. Eventually the casino will catch up, but if you’re smart enough to get up from the table at the right time, you’ll do well.

The last part is understanding. When we don’t understand something, we often fall back on the idea that it’s stupid. Or stupid. Or ridiculous. Pick your favorite insult for lack of intelligence and place it here. Again, it’s a diversion to feel inadequate or ignorant.

In the end, all that matters is what you did, not what someone else traded or talked about. The more you become obsessed with other people and the more you focus on insults, I guess the worse you are likely to do with your trading and investing decisions. However, by taking the time to understand why others might think or act differently from you, you might just open doors to opportunities or help you avoid holding onto something for too long.

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