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I think we need to distinguish between the decisions that require the most wisdom – which are really the hardest decisions rather than the wisest – and the decisions that have the greatest impact on your net worth.

  • The former will mean something different to everyone, so I’m going to focus on the latter.
  • To get a big impact you need to either hold something for a long time, or be operating close to a market extreme.

So I’ll choose three:

  1. First, in the dot com boom I was momentum trading dozens of stocks, running the price data overnight and making trades throughout the next day.
    • I made good money for about a year and then I had a down week.
    • I sold everything the next week, when a lot of my mates held on and ended up losing more than they had made.
  2. Second, at the bottom of the market in 2009, I managed not to sell anything.
    • I was working at one of the investment banks involved in the crisis at the time, and it was clear that most people didn’t know what was going to happen next.
    • I was down an awful LOT of money and my Dad was dying.
    • I really felt like selling.
    • But I hung on and put extra money back into the market as it recovered.
  3. Third, property is a great asset class here in the UK and one of the easiest markets to time.
    • I made a big bet in 1995, tripling the value of the house I was living in by moving to a much better area of London
    • That turned out to be a very good time to buy as prices started going up straight away.

All three of those decisions have made a big difference.

Category: Mike

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