Friends,
Last week, I (Stoffel, here) was being interviewed about earnings season. When asked what I expected from Tesla's earnings, I said:
"I think there's really not much we can learn. Tesla has already published their production and delivery numbers. They just had their 10/10 robotaxi event. I don't expect there to be much news that could move the stock."
The next day, Tesla reported, and the stock jumped 22% -- adding over $140 billion in value in just one day. The company's impressive gross margin and Elon Musk's upbeat outlook for sales next year did the trick.
It's a humbling reminder of something we'd all do well to remember: we are terrible at predicting the future.
But humans (us included) consistently refuse to heed this advice. Something unexpected happens, and we immediately believe that we saw it coming.
There's a name for this: hindsight bias.
And it's corrosive to investing returns.
Combined across all three of us, we've written close to 10,000 articles for The Motley Fool. In a way, writing articles about your investing beliefs is like keeping a journal. Occasionally, we'll go back and read those articles, laughing at our naive bullish/bearish-ness.
But I've noticed a common thread. My best investments are the ones where I've written with optimism about a company's moat and prospects, but I've given equal weight to all the challenges it might face.
Being a cheerleader for a stock might get you a lot of attention, but it won't garner very good returns. The antidote: getting comfortable with all of the possible outcomes -- the good and the bad.
That's why keeping an investing journal is so key. It reminds you of how stupid we all are when predicting the future. Once reminded, we take a more nuanced, holistic approach to the stocks we put in our portfolio.
That's the ticket to long-term investing success.
Wishing you investing success,
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Brian Feroldi, Brian Stoffel, & Brian Withers
Long Term Mindset
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P.S. Brian Stoffel's long-term investing track record is still pretty good​
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