Sean Stannard-Stockton: Your Gut Calls Are Not Designed For This Market

Johnny HopkinsSean Stannard-StocktonLeave a Comment

In his recent interview with The Business Brew Podcast, Sean Stannard-Stockton says your gut calls are not designed for this market. Here’s an excerpt from the interview:

Stannard-Stockton: I think that should be one of the most important considerations that all investors think about is not just what decisions I need to make, but how should I go about making decisions? And that’s something that we’ve spent the last 20 years thinking about and figuring out.

You know, like for instance, we’ve published extensively on our position sizing framework. In conditions like these if you don’t have a framework for making decisions about position size, you are going to be run over by the volatility and making these gut calls, and this is an environment in which your gut is wrong!

That’s just the case right. Now you might make a gut call and be right for a week or for two weeks right. And maybe even get successful and lucky, but the human gut is not designed for market conditions like this.

So the fight or flight response is something that everybody is exposed to. You might think, well I know about that so I can avoid it. It’s just not the case.

Your brain is going to dump chemicals into your body that trigger a fight or flight response, and it’s a very effective response because a long time ago you’re walking out in the forest and you think you hear a bear, you just run away. What’s the downside? There’s no reward for saying, well I stayed here, I was right, and there wasn’t a bear.

You can listen to the entire interview here:

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