Sins of Investing – Pride (Part 2)

Sins of Investing – Pride (Part 2)


A Rich Man and Lazarus” by Vasily Surikov (1873). 

After A Tough Year, Odey Asset Management Finishes 2021 On A High

For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More

Having covered Sin 1: Lust in the previous article, I will be covering on Pride in today’s article.

Sin 2: Pride – Being Overconfident

Everyone possesses an egoistical side, that need for face. Males more so than females. There are always moments in our life where we are blinded by our own pride/overconfidence. This could be us thinking that since we are working in a certain industry, we somehow become experts in it or years of successful investment returns resulting in us thinking we are investment professionals. At times, just by owning a good, that sense of ownership results in pride and resulting in wrong decisions made.

Investment Successes

Having started investing since 2012, I would say every year has been a pretty decent year. As someone new to investing and achieving double digit returns for a few years it is something that would easily get to our heads. It is moments like this where we tend to forget that a rising tide lifts all boats. Markets were all performing well, hence it was natural that my stock picks would benefit from this exuberance. I would admit that I still believe that some part of that investment performance was a result of my skill, but that could just be my pride talking.

Endowment Effect

In behavioural economics, researchers gave a group of volunteers a coffee mug and asked them to write down their lowest selling price for it. Other volunteers were asked to write down the highest price they’d pay for the mug. Because both groups were chosen at random, one would expect that most trades would match off. Buyers and sellers should be able to value the mug equally. However, very little trade took place because sellers priced the mugs at $5.75 on average, and buyers at $2.25.

In investing, this so-called endowment effect leads us to value our own investments more highly than the market does. Some who fall prey to it hold on to securities too long and don’t sell when the market is telling them to bail or to seek new and better opportunities. With regards to the goods we own, we value them more as compared to when our roles are reversed. We will always wish to sell them higher than what we are willing to buy them for.


One interesting theory I have is that people with excessive amounts of pride believes in independent thinking. Rarely they shun from piggybacking ideas from other investors but rather form their own investment thesis. While there is nothing wrong with that if our strength lies in forming original and successful investment ideas. For example, I would often cross reference companies that I deem cheap with investors/funds that are stronger in terms of the qualitative aspect of investing. Often, I find that there is no shame “copying” ideas, as long as we understand the thesis behind it.

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I developed my passion for investment management especially equity research at a relatively young age. My investment journey began when I was 20, at a point in time where markets were still recovering from the Global Financial Crisis. My portfolio started from money I saved over the past years and through working during the holidays. I was fortunate to have a good friend with common investing mentality to began my journey towards value investing. To date, we still research and invest in companies together, discussing valuations and potential risks of a company. To date, I manage a fund with a value investing style. Positions are decided upon via a bottom-up approach or smart speculation (a term I came up with when buying a stock for quick profit due to a mismatch in prices in the market due to takeovers/selling of a subsidiary or associate). Apart from managing my own portfolio, I enjoy sharing my research with family and friends, seeking their opinions and views towards the stock. Reading Economics in London, I constantly keep up with the financial news in Singapore & Hong Kong. Despite my busy schedule, it has not stopped me from enjoying other aspects of life. I enjoy a variety of activities in whatever free time I may have – endurance running, marathons, traveling, fine dining, whiskey appreciation, fashion. Lastly, I enjoy meeting new people, discussing ideas and gaining new perspectives towards issues in the world.
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