In his recent interview on the Richer, Wiser, Happier Podcast, Joel Greenblatt explains why investing is about living to play another day. Here’s an excerpt from the interview:
Yeah. I have five kids, a couple of which I’ve taught investing or tried to teach investing too. I was trying to teach investing early 2020, when COVID appeared.
I tried to explain, “I’ve been doing this a long time. I’ve never seen this, never anticipated anything like this. I’ve never seen where they just closed down the world.” Besides the terrible human cost, I’d never seen anything like this. I just tried to explain to them that, “I’m not going to be much help here.
I’ve never seen this before, but it is a good lesson to learn that you have to be at least diversified enough, and aware enough, that really bad things can happen. You have to live to play another day. What’s probably the best lesson to learn, you can’t put all your eggs in one basket, and you can come back from big mistakes as well.
I’ve made big mistakes with big positions as well, and then bad things just happen. Part of what I always thought you get paid for in this business, it’s kind of your stomach.
What I enjoyed about getting into the business was, if you think well, and if you try to figure things out, it’s not really… count how many hours you showed up thinking about it, it’s the quality of your thought? In this case, it doesn’t matter how well you’ve thought, other things still can happen.
Understanding that, understanding that bad things can happen and preparing to survive to play another day is important. I think that was one of the best lessons. Of course, the market came back fairly quickly, so it wasn’t as painful as it could have been, but we didn’t know that at the time.
You can listen to the entire interview here:
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