The Problem Is That You Solved "The Problem"
Or at least you think you've solved it.
Frictionlessness in investing is doing something to your decision-making.
While selling a house has over fifteen checkpoints that make you rethink your decision, selling a stock has just one that takes only a click.
And because there’s no pushback, the reason doesn’t need to be airtight.
This is where even experienced investors bleed sometimes. Good businesses, exited too soon, over reasons that felt rigorous in the moment and looked thin six months later.
Kahneman, who essentially built the vocabulary for how investors think irrationally, spent years documenting how the brain retrofits logic onto decisions that were already made.
A feeling like discomfort or doubt strikes up
The mind goes looking for evidence to match that feeling
It finds some, organises it, and hands it back as reasoning
That reasoning “feels” like the origin of the decision
What happens next? Action-based rumination.
Uncertainty in a portfolio is unsettling. The mind resolves it in the fastest way available. And in investing, the fastest available action is always to sell.
The relief upon selling feels like clarity, and over time, a few exits that worked make you think that you have an instinct for when to get out.
That’s the illusion of skill: You read market signals as a pattern.
Here’s a video that shows you the problem you haven’t solved yet hiding inside the one you think you have.
Finology’s Exclusive Updates
From Ticker: India’s Next Manufacturing Super-Cycle
Corporate India is building physical capacity at a pace not seen in years: capex cycles opening across energy, defence, and power grids simultaneously.
CWIP, or Capital Work-in-Progress, tracks every rupee committed to factories and expansion before it becomes revenue.
Here’s how to track it on Ticker:
CWIP-to-Assets Surge: Go to the Balance Sheet tab. Look for companies where CWIP has expanded significantly over 24 months. That’s capacity being built that hasn’t touched the sales ledger yet.
DuPont Analysis (Debt Check): Factories require capital. Use the DuPont Analysis tool to confirm the expansion is funded through operational efficiency and not debt eating into the upside.
Retail investors read last quarter’s earnings. The earlier signal is in what a company is building right now.
Game Time!
Think, Investor, Think
You are tempted to sell your shares because the specific industry the company operates in is currently facing a problem, though the business model itself is not permanently broken.
That’s all in The Finology Letter!
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