Do You Really Think 'It's Safe to Assume'?
Jonathan Treussard, Ph.D.
I Help High-Net-Worth Investors Align Their Wealth Seamlessly With Personal Goals & Aspirations ?? | Wealth Management ?? | Ex $150B Global Asset Partner | ?? Economics Ph.D.
People wisely (and often) say that the most dangerous words in investing are 'This Time Is Different.'
A runner-up for ill-advised and ill-fated sayings might just be:
→ It's Safe to Assume that [fill in the blank].
And this goes beyond managing your investment portfolio.
Did you succeed in business (and in life) by just 'assuming'?
Think about it.
When you review your company's financial results...
Or your business strategy...
What would you think if someone said to you:
"We do well in this segment. This line of business. This type of client. We can safely assume that'll continue."
Would you be OK assuming that that'll be the case forever, just because it's been the case in the past?
This type of assumption is the gateway to complacency.
Complacency is the gateway to falling hard on your face.
→Blackberry dominated smartphones until they didn't...
→Blockbuster dominated home video until they didn't...
→Polaroid dominated amateur photography until they didn't...
The present tense is your enemy.
Because the present tense can be used to describe the past, and it lulls you into thinking that it must apply to the future. We call that nowcasting.
That's why 'just assuming' is dangerous.
'Safely assuming' is fuel for the failure of successful businesses.
Chaos Is Life in Markets. Prepare to be Tested.
Markets are designed to keep you guessing...
That's because everything that's obvious is in the price.
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All the hard and unknowable stuff is NOT.
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so. “ – Mark Twain.
Blindly assuming anything is poison:
→Don't assume the market only goes up.
...and...
→Don't assume the market is bound to go down (and don't assume that somehow you know when).
Take a hard look at:
- Historical data.
- Your own biases.
- What you know that just ain't so.
This is tricky. That's why investing is as much about managing regret as it is managing risk vs. returns.
→The past does NOT owe us a repeat performance.
→The future does NOT owe us something radically different either.
And yet, it's better to think than to go on mental autopilot.
The cure is not nihilism.
The answer is to recognize the limits of what we know and invest accordingly.
Be prepared to be WRONG.
And even then, be prepared to act with calm, dispassionate decisiveness.
It never stops.
That's the good news.
?? Here's how I can help you.
Disclaimer: Treussard Capital Management LLC is a registered investment advisor. This content is for educational purposes only and does not constitute financial advice. Investing involves risk, including potential loss of principal. Please consult a professional before making decisions. Any statement that may be seen as forward looking is not a prediction, but exploring a scenario, which may or may not happen in the future. For more information and full disclosures, go to www.treussard.com.
I Help High-Net-Worth Investors Align Their Wealth Seamlessly With Personal Goals & Aspirations ?? | Wealth Management ?? | Ex $150B Global Asset Partner | ?? Economics Ph.D.
3 个月Here is another assumption that caused trouble. - Assuming that housing prices could never fall in the US. - Somehow we managed to make it happen. - And that got us the Great Financial Crisis. Assumptions are tricky, tricky things...