@CFASocietyIndia: Much awaited session at Kolkata by Utpal Seth, Rare Enterprises, on “Dimensions of Mistakes in Investing”, to be moderated by Varun Goenka.
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Utpal Sheth starts with a tribute to Rakesh Jhunjhunwala. Context for the session – Mistakes are rarely discussed!
Outcomes don’t define mistakes. They are known through a process of deep introspection & multiple iterations. The opportunity cost of not embracing mistakes is very high. Utpal speaks of Type 1.5 error – not buying / selling with conviction! Rakesh Jhunjhunwala – “making mistakes isn’t a crime, repeating them is.”
One needs to think of portfolio balance very deeply. Sizing the bet depends on the degree of conviction and degree of evidence. Recommended book: “Thinking in Bets”
On thinking about investment mistakes – 3 key steps – identification, attribution and rectification.
The key is to identify the right jungle (Megatrend) and the right company within that (Gorilla).
Embrace your mistake, let mistakes not affect the balance of your mind, and have a risk Management framework to enable peace of mind.
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