A reader left an interesting question after reading my post on Investing Is A Life-Long Learning Journey. His question was "28 years is almost 3 decades, if you can start all over again, what would be your best advice to the past you?" This is by far the most thought-provoking question I have ever received on my blog. I replied with a short answer, but after thinking more thoroughly about it, I decided to post a fuller answer to this question.
There are many investment strategies that work, be it value investing, growth investing, dividend investing, index investing, etc. We have seen many highly successful masters in investing, each adopting a different strategy. In value investing, we have Benjamin Graham and his many disciples, including Warren Buffett. In growth investing, we have Thomas Rowe Price, Jr.. In index investing, we have John Bogle. We also have a number of other equally legendary investors whose investment strategies do not fit nicely into any of the investment strategies mentioned above.
However, although the investment strategies mentioned above work, they do not always work. If value investing works perfectly, there would not be any value-traps. If growth investing works fully, no price is too high to pay for growth stocks. If dividend investing works forever, we would not have the Mini-bonds saga. Yet, the presence of value-traps, overpriced growth stocks, Mini-bonds, etc. do not negate the fact that these time-tested investment strategies work. They just do not work all the time. There is no need to be too dogmatic about an investment strategy and continue to average down as the stock declines, believing that the investment strategy will turn out well at the end. There is a Chinese saying, "成也风云，败也风云", which translates to "the same factors that brought you prosperity could also lead to your downfall". Do not be dragged down by the dogma of sticking to an investment strategy that has worked well. Occasionally, it is important suspend your belief in your "winning" investment strategy and let risk management measures take over. There is another Chinese saying, "留得青山在，不怕没柴烧", which means "live to fight another day". It is no shame to make mistakes and learn from them. Many famous investors have recovered from mistakes early in their investment journeys and become stronger as a result.
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