Coaching for Investors
“The investor’s chief problem — and even his worst enemy — is likely to be himself.”
— Benjamin Graham, The Intelligent Investor
We’ve all witnessed the stubborn adherence to a thesis or the fearful abandonment of one under pressure, especially when facing unexpected evidence.
My coaching focuses how we make subjective sense of objective data while under stress. This is especially useful with investors. Most investors can quantitatively stress test a portfolio against volatility; it is much harder to do the same for the cognitive and emotional moves their minds make under pressure.
I’ve found that every position implicitly carries personal and emotional risks, however much we try our best to repress them. It’s better to see and predict that felt layer of risk before a drawdown forces it to the surface.
Unlike many coaches, I have been on the buy-side myself. I specialised in shorting frauds and stock promotions, generating significant alpha where short squeezes are an occupational hazard. I know what it feels like to be theoretically right but financially wrong and, conversely, financially right but theoretically wrong.
The developmental frameworks I use are powerful not only for refining experienced investors, but also for developing new analysts. An analyst who is consistently too bullish, overconfident or stubborn in their thinking may not simply be making analytical mistakes. Equally, an analyst who is consistently too bearish, fearful or quick-to-concede may not simply be “wrong” in that obvious sense either.
Understanding the deeper patterns at work in these situations is a powerful tool for overcoming bad habits and developing more effective judgements.