Be sure to look be­yond your in­vest­ment bubbl

Finweek English Edition - - INVEST DIY - BY SIMON BROWN

The in­ter­net is an amaz­ing t h i n g − whate v e r y o u r pas­sion, you’ll be able to find l i ke-minded peo­ple f rom around the world to share it with. So if you only col­lect stamps with steam trains on them, you’ll find like-minded peo­ple from around the world, but you’ll never meet the per­son living next door who only col­lects stamps with semi-pre­cious stones on them. In the world of stamp col­lect­ing, this is not a con­cern, but in the world of in­vest­ing it most def­i­nitely would be a prob­lem.

The prob­lem is that we be­come so im­mersed in our bub­ble and be­come so blink­ered that we can miss sig­nif­i­cant things that sit out­side of our be­lief sys­tem.

One of t he most i mpor­tant, yet hard­est, things we need to do in life and in in­vest­ing is to f ind peo­ple who dis­agree with us. The prob­lem with the vast­ness of the in­ter­net is that I need never hear a sin­gle com­ment f rom some­body who doesn’t agree with me.

On Twit­ter, for ex­am­ple, I can en­sure that I only fol­low peo­ple who say things that I agree with; I can block those who dis­agree. I can make sure that I only read ar­ti­cles that sup­port my i nvest­ing view while i gnor­ing every­body else’s views. Ul­ti­mately, I am living in my bub­ble and pre­tend­ing noth­ing else ex­ists or mat­ters, but the world out­side of my bub­ble does ex­ist and it does mat­ter.

IT MAT­TERS VERY MUCH.

money at that mo­ment, but when we in­vest for decades a ris­ing price that may only last a few months or a year or two is of lit­tle use.

I fol­low peo­ple on Twit­ter who I think are crazy, peo­ple whose ad­vice I would never take in a mil­lion years. In fact, I ac­tu­ally take it a step fur­ther: I ask them to al­ways send me ar­ti­cles t hat I will dis­agree with, I want them to keep me on my toes. I want them to keep me think­ing, think­ing about things that I don’t agree with. Oth­er­wise I get stuck in my com­fort zone, be­lieve ev­ery­thing I say and think and, be­fore I know it, I’ l l get taken out by the mar­ket be­cause I’ve missed the big pic­ture.

An ex­am­ple i s f rom my re­cent col­umn on the ‘sell in May’ the­ory (Pay no at­ten­tion to May doom­say­ers, 15 May21 May is­sue). Ev­ery year it pops up and I dis­miss it. But a few peo­ple will t weet me some ‘ev­i­dence’ that I read and that then forces me to go off and f ind the other side of the ev­i­dence. Of course I then de­cide the ‘sell in May’ thing is silly. But I need to keep on testing it.

So, f irstly, start read­ing things you don’t agree with. Find some peo­ple to read and/or fol­low whom you think are to­tally wrong. Read what t hey have to say, con­sider it and con­tin­u­ally cri­tique your­self, your strat­egy and your in­vest­ments. We can never buy a share or de­cide on a world­view and sit back think­ing all the hard work has been done. There is still lots of work that we con­tin­u­ally need to do, not only to keep our­selves sharp, but to con­sis­tently check we’re right.

Se­condly, be pre­pared to change your mind, in a sense ad­mit that you were wrong. This is usu­ally painful, but if you’re wrong, stick­ing to a wrong strat­egy would be truly painful.

This process of al­ways i nvit­ing i n t houghts you dis­agree with i s on­go­ing, and chang­ing your think­ing is also on­go­ing, al­beit gen­er­ally a slow process. But bet­ter slow than never.

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