Regularly re-evaluate your investment theses. Stubbornly holding onto an initial belief despite new, contradictory information can lead to significant losses. This framework encourages adaptation by forcing you to re-earn your conviction at regular intervals, preventing belief calcification.

While long-term focus is a virtue, investment managers at WCM warn it can become an excuse for inaction. During periods of significant market change, blindly "sticking to your knitting" is a liability. Recognizing when to sensibly adapt versus when to stay the course is a critical and nuanced skill.

David Kaiser's system doesn't try to predict cyclical peaks. Instead, it mitigates the risk of buying hot cyclical stocks by owning a diversified portfolio and rebalancing consistently. This structural approach ensures that if the model over-allocates to a sector at its peak, the error is contained and corrected relatively quickly.

David Kaiser suggests that as AI becomes ubiquitous in investing, a "tiptoes at a parade" problem emerges where no one gains an edge. By intentionally not using AI to constantly evolve his process, he believes his firm can be differentiated. The alpha may lie in the systematic, old-school approach that AI-driven consensus overlooks.

Drawing on a religious analogy, David Kaiser explains that striving for a "perfect" portfolio is a fool's errand. Instead, his rules-based approach is built on the idea of being human and fallible ("missing the mark"). The goal is a good, robust portfolio that can withstand errors, rather than a fragile, optimized-for-perfection one.

Bruce Lee’s philosophy to be “formless, shapeless, like water” is a powerful model for investors. It warns against rigid adherence to a single dogma, like old-school value investing, and instead encourages adapting one's strategy to fit the unique conditions of the current market environment.

Methodical Investment's David Kaiser suggests that the primary benefit of a rules-based system isn't just performance, but the psychological comfort it provides. It establishes a clear process (if X happens, do Y), removing emotional decision-making and making strategy easier to communicate, especially during volatile periods.

To avoid emotional decision-making, especially with losing positions, write down the specific criteria for any investment. Then, backtest those rules against historical data. This replaces emotional struggle with a systematic, data-driven process.

Absolute truths are rare in complex systems like markets. A more pragmatic approach is to find guiding principles—like "buy assets for less than they're worth"—that are generally effective over the long term, even if they underperform in specific periods. This framework balances conviction with flexibility.