EC Don’t Invest Like Captain Hindsight

The only measure of certainty we have in the markets is the clarity of hindsight. No one knows what is going to happen in the future and complicating matters is the fact that no two events unfold in the exact same manner.

That being said, constantly looking to the recent past for your investment direction can be a misleading predictor of future returns. Probably one of the worst things you can do for your portfolio is to turn into Captain Hindsight. You know what I’m talking about….

 “I sold in February because I was scared and now I’m trying to buy every euphoric rally along the way to make up for it.”


“I criticized my advisor for not being conservative enough four months ago, now I’m yelling at him for not being aggressive enough near the highs.”


How did you not know utility stocks were going to be up 23% in six months? It was so obvious at the beginning of the year!

Let’s face it, you missed a few breaks along the way or made a decision that you felt was rational at the time and now regret.

So what? It happens to the best of us. Shake it off and keep a sound perspective.

Everyone has multiple investment opportunities that pass them by during the course of their lifetime. Hundreds of these happen to us every single day without our knowledge. It’s the ones where you consciously made a decision (get in or stay out) that cause the most regret.

The funny thing is that you only know the outcome with the benefit of hindsight. It could just as easily have gone the other way and you would look back with relief that you didn’t make the move.

The best thing you can do when you are holding on too tight is take a step back and assess your situation from a big picture standpoint. You have time to make up for any missteps along the way.

The beauty of the market is that it is always serving up opportunity. We just have to be patient enough to wait for it to come to us.

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Disclosure: At the time this article was written, the author owned shares of EUFN. 

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Chetan N Patel 3 years ago Member's comment

First I would like to say great article and great topic of choice. To be successful in the real world, you need to have a short term memory because you will miss opportunities. This is not only true in finance but in other careers as well. The only thing you can really do about it is not beating yourself up about it. People miss key opportunities all the time and they can always learn from their mistakes. Dwelling on mistakes will only worse the situation and it will not lead to successful future. Thank you for contributing such and interesting article. It is a very interesting read for young finance enthusiasts like myself.

Chetan Patel

Dividend Diplomats 3 years ago Contributor's comment

Agree completely. To be successful, you need to have a short term memory. If you did miss an opportunity, oh well. Figure out why you missed the opportunity, learn from it, and apply that lesson the next time the situation arises. However, dwelling on the misses and having a knee jerk reaction is a recipe for failure.

Great topic!