I came across a post today from Brendan Mullooly and thought it was worth reflection as he makes great points and touches on things most investors struggle with.
The cliff note version of his primary point is that when it comes to investing, there is more than one way to skin a cat, and that truth has been demonstrated over and over again.
But, one related point he makes was what hit home for us today and is reflected in this note’s heading. He says-
“I think one of the most dangerous mindsets a person can have is believing it’s their way or the highway when it comes to investing. If you think you’ve found the one and only investment strategy that works, you’re fooling yourself.”
Paraphrasing: It pays to keep an Open Mind!
Most of us gravitate to what we know, or what we think we know. It’s important to recognize that and be intentional about exploring other possibilities if we are going to achieve our best outcome. No matter how strongly we believe in what we do, and no matter how well researched or supported our methods might be, we should continually be open to new ideas.
We believe that and intentionally seek feedback from our peers in the industry. Because our focus is not typical and we have compelling evidence to support our methodology, doors have been opened for us to regularly present our methods to other money managers and advisers.
In those meetings we don’t talk much about P/E ratios, balance sheets, or overall market valuations but instead focus on behavioral limitations of investors, how those limitations might manifest themselves in the price of a security or asset class, and how this is the foundation upon which we build around when constructing portfolios.
We want feedback and start every meeting with an invitation something along the lines of – “Before we get going, we want you to ask us questions. Please look at our research and our data, kick our tires, look under the hood, and ask why, so we can explain. Tell us what we have missed or overlooked, show us other angles to consider, poke holes in our approach.” We hope that start shows that we aren’t there to shove our methodology down anyone’s throat (the “my way or the highway thing”) but instead are there to explain what we do, support it with facts, and to learn from their questions and perspective.
These meetings have been an eye-opening experience and to reinforce the message from above, we find our meetings fall into two categories and an unexpected (well..now expected) by-product to our invitation to ask questions has been that it helps us determine quickly which type of meeting we are in:
- Close-Minded: These are awful
- Open-Minded: These are a much better use of our time
An open mind creates an environment of continual learning and improvement. It fosters different concepts and makes us reexamine over and over. It makes us study and know our methodology inside and out without shutting the door to new ideas.
That’s the environment we want to work in and the culture we are creating. We owe it to our clients and we owe it to ourselves.
See Brendan’s full post here: http://www.mullooly.net/the-most-important-lesson-i-learned-this-year/8531