Conviction vs Pragmatism
Knowing when to fold is as important as knowing when to bet.
As a full-time investor whose livelihood depends on performance, I try to stay as detached and pragmatic as possible with any position I take.
The only thing I’m truly wedded to is Bitcoin. Bitcoin is money. Everything else is optional. If I see headwinds forming around a stock or sector and believe I can avoid losses—or simply earn a better return elsewhere—I’ll reallocate without hesitation. My belief in the theory behind an investment might remain intact, but that doesn’t mean I need to watch the market smash my portfolio just to prove conviction.
I can’t feed my family with conviction for a down sector.
If I’ve performed well in a position and am sitting on 100, 200, 500% gain, but then the market (for whatever reason) tells me it’s cooling or starting to doubt the idea - does it make sense to ride it down to only a 50% gain, or worse yet, a loss, and live in hope that it rebounds to 700%? Who knows how long that takes? Not every business or sector survives the downturn. How long would you have ridden Blockbuster or Kodak stock down before finally exiting?
Alternatively, I can move capital into something I expect to outperform, with the option to re-enter the original investment later if the market turns — maybe at a higher price, but with momentum and tailwinds behind it. I’d rather be positioned with the wind at my back than fighting against it.
I get that it can be intellectually satisfying to be contrarian. My biggest position is Bitcoin, and I’m invested in hated sectors like coal, Russian stocks, and companies trading at 100+ P/Es. But that mindset can backfire fast. When the market is clearly telling you — at least for now — that you’re wrong, there’s no shame in picking up your chips and moving to a better table.
After decades of investing, I’ve learned that conviction alone doesn’t guarantee recovery. Some positions—and some industries—never come back. The sunk cost fallacy is real. Opportunity cost is very real.
I don’t want to be the guy with the highest conviction standing in the bread line. I’ve seen it happen — I still see it. As my bio says: blend conviction with pragmatism.
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