This Trait Makes You a Better Investor: Barry Ritholtz

“This too shall pass.” Companies can crash and burn from great success for many reasons, Ritholtz wrote. It’s easy to forget this and assume dominant companies will remain in that position. “BlackBerry, Lucent, Nokia, NT were the dominant telecom players in the 1990s/200s, and soon faded. Which dominant companies in the 2020s will suffer similar fates?”

“We fail to properly evaluate content we consume,” he wrote, adding, “Everything you read, listen to or watch should to [sic] be analyzed for its integrity and accuracy. … Investors cannot simply accept or reject something because it’s in a magazine or on television.” They should know the source’s track record, he said.

“We underappreciate cycles” and have trouble looking beyond the present. Trends feel permanent, he wrote, but even as “Nokia looked unbeatable in 2007 … the seeds of its destruction were planted years prior.”

“Change is constant.” While people are experts in how the world used to be, the universe is always in flux, Ritholtz wrote. “ This means we must constantly check our own knowledge base as it ages out of currency and decays over time,” he explained.

To drive home his points, Ritholtz linked to a 2021 blog post in which he cited a 2001 Business Week article predicting that Apple stores would flop.

“Numerous armchair pontificators freely shared their uninformed opinions as to why this concept was destined to fail,” Ritholtz wrote last year.

“We can be challenged by novelty, and sometimes are made uncomfortable by what is different and unfamiliar. Once something is a success, we have a hard time recalling how life was before that product existed,” he noted.