Do you have convictions in your approach to building and maintaining a portfolio for yourself or your clients?
Have you argued with yourself enough to understand all the ways that your approach could be picked apart?
We’ve found that it’s much more important to develop an understanding of the bad of your process rather than a focus on the good. That understanding is what provides the ability to articulate the how and the why of your process in a clear/digestible format. The kicker is this – you should actually be articulating it.
With anything related to investing, you should spend time communicating how you are bringing value to the table. The world of investing and financial services is finicky, the good can look dumb while the dumb can look the great. Separating what is what without a deeper grasp on process is difficult. The stickiness of your offering or value should have something to do with how well others understand what you actually do. Their understanding is dependent on your communication, and to an extent, their success is too.
Most investors don’t make changes when things look good. Changes occur when your process appears to have fallen into the dumb camp. Argue with yourself, out loud, for your clients to hear. Provide the understanding that helps minimize behavioral risks.
“The ability to destroy your ideas rapidly instead of slowly when the occasion is right is one of the most valuable things. You have to work hard on it. Ask yourself what are the arguments on the other side. It’s bad to have an opinion you’re proud of if you can’t state the arguments for the other side better than your opponents. This is a great mental discipline.” — Charlie Munger