Here’s a scenario: you’ve identified a potential investment, you’ve gone through the checklist and done your research, and you decide that you’ve found a deal that other people seem to be overlooking. You pull the trigger to buy into this company, and then the stock price begins to decline and you begin to wonder if you’ve made a mistake.
Knowing the difference between having confidence in your investing process and being arrogant or blindly confident in a position can allow investors to act on proven strategy as opposed to being driven by fear and emotion. Having a long-term outlook and a diligent methodology is the way for capable value investors to find the deals and realize the returns that many others in the market get wrong.
This week, Phil and Danielle tackle another constant issue for investors as they dig into when, how, and why you should (or shouldn’t) stick with a purchase that doesn’t seem to be panning out the way you’d suspected.
For help finding businesses that you feel confident investing in, click here for the “3 Circles” Exercise Guide: https://bit.ly/3LOexg2
Topics Discussed:
Patience and discipline in value investing
The dangers of hubris and confirmation bias
Informed assumptions vs speculation
Resources Discussed:
Berkshire Hathaway shareholder letter (2013)
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