I realize I’m not right very often. In fact, I’m wrong a lot. Almost everyone is. So what if you could find a way to be right, even when you are wrong?
What I’m talking about is being directionally right, but absolutely wrong. My favorite way of doing this is by thinking wider vs narrow. Have bull cases that can survive chaotic events happening. Be ready for the unknown because it is inevitable.
An example of me being right when I’m possibly wrong is my Spotify holding. Many other Spotify bulls believe that Spotify will continue to extract more and more value from the labels, creating a mass wealth transfer to Spotify. I get why they believe this, but the path to this is dangerous. To me, this is substantial risk. I’m much more open to my bull case of Spotify continuing to grow the music market (labels, artists and Spotify make more money in the process) and Spotify entering new markets (podcasts, audiobooks, media, meditation, video, etc…). The beauty of this kind of thought is that I can be wrong (not even think of the new revenue stream) and still be right.
In many ways this is optionality. I love companies that have multiple paths to a beautiful end. Investing is risk management and this gives upside potential while reducing downsides. I’m trying to get rich, but I really don’t want to be poor. To me, this is the path.