Be Curious: The Key to Successful Behavioral Investing
- Chip Rewey
- 13 minutes ago
- 2 min read
Be Curious: The Key to Successful Behavioral Investing
One of our favorite Ted Lasso moments highlights the power of curiosity (link below). Not only is this scene fun to watch, the lessons for behavioral investing, and life in general, are spot on. A successful investor is genuinely curious. This curiosity isn’t just asking questions; it’s about actively seeking new information and enjoying the process of learning.
Don’t Be Defensive
Early in my career, a mentor told me that an analyst’s job is to hunt for new information. That advice still holds, with one critical behavioral caveat: avoid confirmation bias. The most valuable information is often what challenges your thesis, not what supports it.
Why New Ideas Face Resistance
New ideas and contradictory information often meet resistance for two reasons. First, a new idea requires time and effort. In a hectic world, the impetus to dig into a new concept can, and often is, resisted. Second, everyone has beliefs and biases. It is only human nature to challenge information that potentially can prove one’s beliefs wrong. In investing, this resistance can lead to neglect. We believe neglect and low expectations are just as important as undervaluation.
Curiosity: Taking Pleasure in Learning
A curious person is intrigued to learn new things and even energized to dig deeper into new information that could contradict an existing belief. We believe this mindset can only be achieved
by removing emotion from the investment process.
We Try to Prove Ourselves Wrong
The best way we have found to remove emotion and confirmation bias from our own investment process is to try to prove ourselves wrong. After building an investment case, we flip our perspective and search for reasons why our thesis could be wrong. We delve not only into stated risks but also seek outside views from competing companies or technologies.
When an investment thesis survives our best efforts to tear it down, it earns both our confidence and our capital.
This material is for informational purposes only and is not a recommendation or advice. Investments and strategies mentioned are not suitable for all investors. This does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Before investing or using any strategy, individuals should consult with their tax, legal, or financial advisor.
Rewey Asset Management is a registered investment advisor in the State of New Jersey
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