The exception to the rule is if you lose conviction in the long term prospects of a business. In that scenario it's better to act quickly rather than wait in my experience.
I'm very much of this mindset now, any time in the past I've tinkered around or jumped to a conclusion, it's typically been a learning curve.
I do think having such easy access to news, data, statements etc is a blessing and a curse at the same time. It can make investors bolt into action when, as suggested, they should bide their time.
I thought I'd elaborate a little on my T212 comment.
My day job is basically one of risk management and mitigation. "Do Nothing" is a recognised risk management strategy, and one I always consider. Typical strategies are:
1. Accept risk (do nothing)
2. Avoid risk (remove it, may introduce other risks)
3. Mitigate risk (reduce impact)
4. Transfer risk (pay/persuade someone to take the risk on for you, e.g. insurance).
Options 2 - 4 usually incur some cost and change. People are naturally prone to optimism bias and not thinking widely enough about the unknowns (What You See Is All There Is), meaning we inherently underestimate the risk of change, because we haven't seen what COULD go wrong, only what IS going wrong today.
If I am to make a change, I need to be convinced that the risk of not changing is worse than the known cost and unrecognised risk of making that change.
I think this is very good advice.
The exception to the rule is if you lose conviction in the long term prospects of a business. In that scenario it's better to act quickly rather than wait in my experience.
I'm very much of this mindset now, any time in the past I've tinkered around or jumped to a conclusion, it's typically been a learning curve.
I do think having such easy access to news, data, statements etc is a blessing and a curse at the same time. It can make investors bolt into action when, as suggested, they should bide their time.
Great read by the way 👍🏼
I thought I'd elaborate a little on my T212 comment.
My day job is basically one of risk management and mitigation. "Do Nothing" is a recognised risk management strategy, and one I always consider. Typical strategies are:
1. Accept risk (do nothing)
2. Avoid risk (remove it, may introduce other risks)
3. Mitigate risk (reduce impact)
4. Transfer risk (pay/persuade someone to take the risk on for you, e.g. insurance).
Options 2 - 4 usually incur some cost and change. People are naturally prone to optimism bias and not thinking widely enough about the unknowns (What You See Is All There Is), meaning we inherently underestimate the risk of change, because we haven't seen what COULD go wrong, only what IS going wrong today.
If I am to make a change, I need to be convinced that the risk of not changing is worse than the known cost and unrecognised risk of making that change.