If you’re staring at your portfolio thinking now is the time to make some changes, I can say with almost absolute certainty you’re wrong.
A lot of people are thinking the same thing. It’s a popular view at the moment. That might sound like good news but it’s not. Following the popular path – where thinking and behavior are concerned – rarely ends well.
To enjoy a reasonable chance for continued better than average results, the investor must follow policies which are (1) inherently sound and promising, and (2) are not popular in Wall Street. – Ben Graham
Be fearful when others are greedy and greedy when others are fearful. – Warren Buffett
If you think the same as everybody else, you’ll behave the same. And if you behave the same as everybody else, you can’t expect to outperform. – Howard Marks
Just think and behave differently than everyone else and you’re set. Sounds easy enough.
But being different is a hard thing to do whether the markets are going up or down because it runs counter to human nature. It’s too uncomfortable.
It means having to watch other people make money while you’re not.
It means selling what most people love. And it means buying what most people hate (today it’s things like emerging markets, oil stocks, commodities, and some junk bonds).
It means being willing to underperform the crowd for long periods of time.
It means being unshakably right even when everything seems to scream “your wrong”. And it means humbly and quickly changing course if you actually are wrong.
But it’s more than just being different because you can be. It means separating out assets that deserve their price direction from those that don’t. And it means only taking on risks that won’t wipe you out in case you’re wrong.
If you can do those hard things, then be different. But history has proven that most people can’t or won’t.
For everyone else, try to avoid any sudden urge to change things because doing nothing is often all the different you need.
- Bull Markets vs. Bear Markets – A Wealth of Common Sense
- The Agony of High Returns – M. Housel
- The Cost Matters Hypothesis – Morningstar
- You Are Owed Nothing – Irrelevant Investor
- Markets Don’t Work as Well as We Thought – N. Smith
- A Dozen Things I’ve Learned from Carl Icahn about Investing – 25IQ
- Warren Buffett and the Great Salad Oil Swindle – Business Insider
- Charlie Munger at the 2016 Daily Journal Corp Meeting – Valuewalk
- GMO 4Q 2015 Quarterly Letter – J. Grantham
- Global Investment Returns Yearbook 2016 – Credit Suisse
- Offer: Get Your Taxes Done Early and Save with TurboTax