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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:
- 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.
- 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.
- 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.
← What has been your wisest investment decision?
