Consistent
Markets continued moving higher, with the S&P 500 and Dow closing last week at record highs. Both indices and the Nasdaq gained just north of 1% during the week.
In an interview about a decade ago, venture capitalist Ben Horowitz was asked about the mistakes that start-ups make, to which he replied:
There are so many mistakes…I think probably the most common mistake is trying to be consistent. What happens is you get an idea, you sell people on the idea—investors, the employees—and you get into it and the idea turns out to be wrong. But you want to be consistent and you hold onto it longer than you should…It’s better to be right than consistent. And that’s a very hard thing to learn, particularly early in life.
That mistake happens with investors, too. And it’s an excellent reminder to look at your portfolio and be objective about it. Do you hold what you hold for the right reasons? Or do you hold what you hold because you’re being consistent with past beliefs—which may no longer be valid?
“Engaging in routines that allow you to maintain objectivity are, of course, very helpful to cognition. We all remember that Darwin paid special attention to disconfirming evidence, particularly when it disconfirmed something he believed and loved. Routines like that are required if a life is to maximize correct thinking.” —Charlie Munger
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