What do I think about tariff war between US and China will impact on the stock market?
My answer is I don’t know and I don’t pay much attention on it.
I know the future is unknown and having the humility to admit that we can’t predict it is very hard for us to do.
One of biggest mistake for a fund manager is to overestimate our prediction abilities and overconfidence, particularly in the investment world, can be disastrous. Why?
With overconfidence comes the tendency to overtrade and make highly speculative, concentrated bets on the future.
What’s the best way for investors to manage their overconfidence?
-Diversification: not putting all of your eggs in one basket.
-Resisting the urge to trade.
-And sticking with a broad asset allocation plan.
Boring, I know; not nearly as exciting as letting it ride in some cryptocurrency. I completely agree, but successful investing is not supposed to be exciting or entertaining. By diversifying, you’re removing your ego from the equation and accepting the fact that you’re not likely to pick the next Amazon or make the next Big Short.
To the contrary, I am saying three important words when it comes to making precise predictions or forecasts about the politic and stock market: I Don’t Know.
My answer is I don’t know and I don’t pay much attention on it.
I know the future is unknown and having the humility to admit that we can’t predict it is very hard for us to do.
One of biggest mistake for a fund manager is to overestimate our prediction abilities and overconfidence, particularly in the investment world, can be disastrous. Why?
With overconfidence comes the tendency to overtrade and make highly speculative, concentrated bets on the future.
What’s the best way for investors to manage their overconfidence?
-Diversification: not putting all of your eggs in one basket.
-Resisting the urge to trade.
-And sticking with a broad asset allocation plan.
Boring, I know; not nearly as exciting as letting it ride in some cryptocurrency. I completely agree, but successful investing is not supposed to be exciting or entertaining. By diversifying, you’re removing your ego from the equation and accepting the fact that you’re not likely to pick the next Amazon or make the next Big Short.
To the contrary, I am saying three important words when it comes to making precise predictions or forecasts about the politic and stock market: I Don’t Know.
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