Adventures in wrongness

Credit: Scott Adams

A few weeks ago I wrote about how the COVID-19 impact on the markets is temporary.

Since that post

Boy was I wrong.

A few things I’ve learned in the last few weeks

Talk is cheap, taking positions is the ultimate test

To action my belief that this market dip is temporary I took some positions. I started maintaining an investment diary (preview here) and It is pretty clear that my positions are underwater :). We can have all the opinions we want, but in the end, the P&L is the ultimate decider, and it is very very very humbling to realize that your beliefs are wrong!

Confirmation bias is real and it is hard to counter it

As I look back at my mental state when I formed my initial beliefs – what came first, the belief or the confirmation? I am actually not sure if I formed my belief independently and then sought to confirm it via my usual reading sources OR was I just ethereally reading about the market dip being temporary and tricking myself into believing that I had a belief? A deeper question – does being aware about confirmation bias matter? Even if we are aware of it – can we do anything to counter it? I certainly was aware of it – but wasn’t able to counter it. Is it that biases are only identified in hindsight? The only reason I’m thinking about it now is that my P&L has shown me that I was wrong.

I (we) are bad forecasters

Nothing more to add here 🙂

Stay Humble, Stay Safe!

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