To combat the emotional burden of binary sell-or-hold decisions, use the "Go Havsies" method. Instead of selling a full position, sell half. This simple algorithm diversifies potential outcomes—you benefit if it rises and are protected if it falls—which significantly reduces the psychological pain of regret from making the "wrong" choice.
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True investment prowess isn't complex strategies; it's emotional discipline. Citing Napoleon, the ability to simply do the average thing—like not panic selling—when everyone else is losing their mind is what defines top-tier performance. Behavioral fortitude during a crisis is the ultimate financial advantage.
Claiming to have too many ideas is not an intellectual problem but an emotional one. It is a common excuse to avoid taking action, rooted in a deep-seated fear of failure and social judgment. The solution isn't better analysis, but simply taking action—flipping a coin or throwing a dart—to overcome the emotional barrier.
When you take a professional risk, the result is binary: either you succeed, or you fail. While failure might sting, it provides a definitive answer, freeing you from the mental anguish of wondering 'what if.' Both outcomes are superior to the paralysis and prolonged uncertainty of inaction.
Being unable to choose between several viable ideas isn't a strategy problem; it's a psychological one. This indecisiveness is often a defense mechanism, allowing you to talk about potential without ever risking the public failure of execution. The solution is to force a decision—flip a coin, draw from a hat—and commit.
Post-mortems of bad investments reveal the cause is never a calculation error but always a psychological bias or emotional trap. Sequoia catalogs ~40 of these, including failing to separate the emotional 'thrill of the chase' from the clinical, objective assessment required for sound decision-making.
To avoid emotional, performance-chasing mistakes, write down your selling criteria in advance and intentionally exclude recent performance from the list. This forces a focus on more rational reasons, such as a broken investment thesis, manager changes, excessive fees, or shifting personal goals, thereby preventing reactionary decisions based on market noise.
Deciding to pivot isn't about perseverance; it's a cold, rational decision made when you've exhausted all non-ridiculous ideas for success. The main barrier is emotional—it's "fucking humiliating" to admit you were wrong. The key is to separate the intellectual decision from the emotional cost.
Cramer advises against 100% diversification into index funds. He suggests putting 50% of a portfolio in an S&P 500 fund as a safety net, while using the other 50% to invest in a small number of deeply researched stocks that you have a personal edge or conviction on.
When deciding whether to continue a venture or quit, the key isn't just data. It's a personal calculation balancing two powerful emotions: the potential future regret of quitting too soon versus your current tolerance for financial anxiety and stress. This framework helps make subjective, high-stakes decisions more manageable by focusing on personal emotional thresholds.
While having a disciplined rule like reviewing a stock after 24 months is useful, it should be subordinate to a more critical rule: sell immediately if the fundamental investment thesis breaks. This flexibility prevents holding onto a losing position simply to adhere to a predefined timeline.
