STREET DOGS

FYou know who made the most impactful mistakes leading up to the financial crisis? People with experience!

Experience is not the same thing as expertise.

For every investor who has learned from his or her mistakes and experiences with various market environments, there are three to four who are stuck fighting the last war — who have become prisoners to their memories of past markets.

The vast majority of the people who were right about the timing of the upturns could never bring themselves to admit the good times don’t last forever. And the majority of people who were right about the timing of the downturns could never bring themselves out of the bunker mentality.

How many investors called the 2008 crisis, only to miss out on the ensuing recovery? All of them?

I’ve seen plenty of money manager presentations touting their 634 years of combined experience. Does this really tell you anything?

Experience in the markets is often overrated. Talent and intelligence are also overrated. Temperament, patience, self-awareness, humility, discipline and process are all extremely underrated.

The current market environment is uncharted territory for investors both young and old, green and seasoned.

No two market environments are ever the same. The only constants are risk and human nature. Everything else about the future is always uncertain.

The investors who understand these two concepts give themselves a better chance of succeeding when this cycle does finally turn, no matter how much or how little experience they have.