If you know Berkshire Hathaway
Today, we'll talk about tendency No. 4: Doubt/Avoidance Tendency.
Don’t just stand there … do something!
Have you ever noticed how whenever we have some kind of decision that needs to be made, we tend to just want to get it over with? Regardless of the outcome, and many times when the situation becomes more and more stressful, we as humans seem to be programmed to just want some finality to the situation, whatever it may be. Such is the nature of the Doubt/Avoidance Tendency.
Think about a judge and/or jury for a moment. So powerful is this idea of just reaching a decision and removing all doubt that we have it set up in our judicial system that deciders must take the time to deliberate, lest they reach a decision based purely on emotion and no fact in the matter.
So why do we just want finality? Typically, it's caused by one of two triggers (or some combination of the two): puzzlement and stress.
Buy? Sell? Hold? What do I do??!!
We can see a great example in investing when news hits on a stock we own or are thinking of owning. If the price starts falling, what do you do? Is there enough time to make an informed decision? Should you hold or sell? Or buy more? It's not an easy answer at all. But being well informed on the stock in the first place can help check this dilemma. Imagine if you saw some news blurb that came out and you could immediately recognize whether it was a valid threat or just "noise," as Nassim Nicholas Taleb might call it.
Take Best Buy
Therein lies the importance of knowing what you're invested in and keeping a record of why you're invested in it. Remember, sometimes it's these moments of puzzlement and stress that open the window of opportunity for us as investors. And when that opportunity comes, you gotta be ready to take it.
Read the other installments so far in this series:
