by Tom Bradley

Recently, I met a client who is managing part of his portfolio on his own. It’s going well so far.

Something stuck with me from our conversation, however, about the stocks he owned. The one he loved the most, his largest holding, was doing well this year. It was up 20% (as I recall). A comparable one, however, was down 7% and he’d decided to sell it. It was ironic because the one he sold for short-term underperformance (Berkshire Hathaway) was bought because of the CEO, who is the greatest long-term investor of all time — Warren Buffett.

The struggle between thinking long term and making decisions based on short-term information and feedback is a mighty one. I wrote about just this topic in a recent column.

I raise it again because I came across an interesting video about behavioral biases and pitfalls (thank you to our friends at Mawer for alerting me to this). Morgan Housel of the Collaborative Fund is giving the talk to a CFA Society in India. Through some relatable stories and analogies, he reminds us why it’s important to keep our investing process simple and act long term.

The talk is about an hour long. I thought the first half hour was particularly good. He finishes with a statement that's rather hard hitting, but we'd all be wise to take to heart nonetheless:

“We’re so lucky to live in an era where there are markets all over the world that are capable of generating big returns for ordinary people. And if we’re not taking advantage of that, it’s often not because of what the markets did to us, it’s because of what we did to ourselves. We often have to be reminded that people do not get what they want or what they expect from markets, they get what they deserve.”

So, pour yourself a cup of tea or glass of wine, and get ready to adjust the way you think about the world of investing.