Worth repeating from Swensen's "Unconventional Success" book:
On the need for conviction:
- “Real conviction proves necessary to stick with an out-of-favor strategy in the face of apparently poor results and obvious public skepticism. Investors ultimately reap reward only if they maintain positions in the face of market woes.”
“Lightly held positions invite casual reversal, exposing vacillating investors to the costly consequences of market whipsaw.”
“Unless investors adopt firmly held convictions regarding the efficacy of target portfolios, nearly certain disappointment results.”
- “Devoting significant time and energy to the science and art of designing long-term portfolio targets increases the likelihood that investors will develop the conviction necessary to maintain a steady long-term course amid the turbulent crosscurrents endemic to security markets.”
“Investment success requires the conviction that comes from a fundamental understanding of the rationale for building the portfolio to certain specifications.”
What was your rationale?