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John Kingham's avatar

Hi Todd, hope you're doing well and good luck with this new venture.

On discerning when it is or isn't a good idea to be greedy when others are fearful, this struck a cord with me because I try to capture some aspects of this through position sizing rules, and I recently updated those rules.

Because investing is an emotional pursuit filled with uncertainty, it's impossible to just say, right off the bat, that you should just have this or that amount in a given investment based on the risk & return profile. Instead, it takes time and skin in the game and an accumulation of mistakes before you begin to get a feel for what level of risk is tolerable for you, regardless of what might be theoretically optimal.

In my case, it took a couple of years and some seemingly very low valuations in the UK (and therefore relatively large position sizes) for me to realise that my position sizing rules needed to be slightly less aggressive.

As you say, discernment isn't something you can learn from a book. You have to learn it from life (although books can speed the process up and help us avoid catastrophic errors).

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Richard Toad's avatar

Love it - gotta have skin in the game

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