Financial pundits tend to have a hot take on every stock and a strong view on every market turn. And the louder and more certain the opinion, the more credibility it seems to carry.
If you can’t dazzle them with brilliance, baffle them with bullsh*t! Whatever you do, allow no room for uncertainty.
The market’s full of folk who are an inch deep and a mile wide. Jacks of all trades, masters of none. That’s fine if you’re trying to look clever on some panel, but it’s a different story when real money’s on the line.
Sometimes the smartest thing you can say in investing is: “I don’t know.”
As Howard Marks puts it, “You don’t have to have an opinion on every investment. In fact, you can’t.” There are simply too many stocks out there for you to have an informed view on each one. And that’s fine. It’s far better (and far more lucrative) to know a lot about a little than a little about a lot.
And if you’re going to narrow your focus, don’t waste time on things that are hard to understand. Buffett, as usual, nails it:
“There are no extra points for the degree of difficulty. You get the same score for jumping over a one-foot bar as a seven-foot bar.”
When you buy a stock you don’t truly understand, odds are you’ll dump it at the first pullback. Even if you get lucky and it runs, you may rush to lock in a quick profit for fear it’ll vanish. Neither impulse serves you well. Jumping at every shadow and cashing out on every small pop is a near-certain route to mediocrity, at best.
Conviction is what lets you hang in through the volatility and stick around long enough to enjoy the fruits of compounding. And conviction only comes from understanding. And understanding comes from putting in the work.
So for every company on the ASX, ask yourself: Do I really understand the business? Can I form a reasonable view of its long-term prospects? Do I have any idea what “cheap” or “expensive” looks like? Often, the honest answer is no. That’s perfectly fine. Toss it in the “too hard” basket and move on.
There’s no shame in that. In fact, you’d be in good company.
“We have three baskets for investing: yes, no, and too tough to understand.” — Charlie Munger
What you’re really looking for is a rare combo: an insight the wider market hasn’t priced in, the conviction to believe it’s accurate, and the patience to let it play out. These are rare birds. And you might wait a long time between sightings. But when one lands it pays to act decisively.
So lean into not knowing. Investing isn’t about having answers to every question. It’s about knowing which questions are worth asking and which ones you can answer with confidence.
In that humility lies your edge. Not just as an investor, but as a thinker.
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