I'm Right (Or You Need to be Wrong)

Not counting lawyers, people in finance are the worst when it comes to needing to be right all the time. And I think some people in finance would even give lawyers a run for their money – but then the lawyers would just sue them.

I once worked with a guy* who would challenge everything anyone would say.

“The sky is blue.”

“Not always. It’s a different colour at sunrise and sunset. And what about at nighttime?”

“OK. Fine. You’re right. Sounds good.”

“Pfft. You won’t even challenge me? You’re weak. Where’s your conviction?”

“Like I said, you’re right.”

He always needed to push back. But not because he disagreed. But because if he didn’t, it would look like he was conceding something. It was as if I was living in the comment section. And that’s a place where souls go to die.

Having conviction and needing to be right are not the same thing. Conviction is earned and it’s quiet. Needing to be right is easy (not simple) and it’s loud.

Here is a real conversation I had with a colleague late in 2023. I remember it well because of how much it bothered me. And because it was the morning I found out I had earned CFA designation, so maybe I was lacking some humility.

“I think most investors interested in individual S&P 500 companies would be better off owning the entire S&P 500 index instead of trying to pick what they think will be the winning stocks.”**

“The S&P 500 index is a fine investment, Vince. I won’t argue with that. But you’re wrong. You’d be better off investing in the best companies in the index and ignoring the bad ones. It’s about diversification more than it is stock selection and you can be appropriately diversified with less than five hundred companies.”

“But we don’t know which companies are going to be the good ones.”

“Yes we do!”

“Oh, boy.”

It went on like that for another fifteen minutes. He got louder and louder.

Conviction about an unknowable future is the same as needing to be right. Conviction in your process, your methodology, and your standards isn't something you can prove or debate. It's something you earn.

I’m sure that guy would say that statement is wrong. Then tell everyone about it in the comment section.

*I’m using the word “guy” to describe a few different people. Some men, some women.

**Not investment advice. Not even close.

This post is for educational and illustrative purposes only. Any investments mentioned do not constitute a recommendation or solicitation to buy or sell any security. Past performance is not indicative of future results. Individual suitability varies. What works for one investor may not be appropriate for another. Please speak with your advisor before making any investment decisions. See additional disclosures at https://www.herlaarwm.com/vinces-blog