Breadth Thrusts & Bread Crusts: Stillness Can Be the Riskiest Decision

JC Parets
November 11, 2021

From the desk of Willie Delwiche.

After my daughter’s flight landed in Minneapolis, she had to hurry through the terminal to catch a bus for the ride that would complete the final leg of her trip back to college. She did a great job of navigating uncertainties and asking for directions. She went where she was told and saw people, but no bus. "Just wait here," she was told, "the bus shows up, you get on, and it leaves right away."

A couple of buses came, some people got on, the buses left. Meanwhile, her ride was still a no-show. 

But people who appeared to be in-the-know said she was in the right spot. 

So she waited.

While not yet at the point of despair, she was starting to wonder about other ways to get back to campus. Finally, a police officer she had befriended earlier tracked her down to let her know the bus would actually be departing from a different location. He told her to hurry, because the bus was waiting to leave. She arrived at the correct bus -- out of breath but just in time. When she was safely back to campus, she had a great story to tell.

It's all well and good to wait patiently if you’re in the right spot. But if you’re not, waiting patiently is a fool's errand. At best, you miss opportunities. But it’s more likely your entire plan goes awry. 

A traveler with more experience might have pieced together evidence that the bus wasn’t going to show up at that location. I'm thankful for the clear signal from the friendly officer who realized that for her to successfully catch her bus, she needed to adjust her approach and re-allocate herself elsewhere. Her current transportation exposure was not going to result in her getting back to her dorm.

It’s not difficult to see there are lessons for investors in this experience. Sitting passively and maintaining your exposure is the right approach if you are well-positioned for the reality at hand. If that’s not the case, stillness is the riskiest decision. Sticking to the wrong plan is just stubbornness.

If you know you’re in the wrong spot, moving away from that spot increases your odds of success.

Inertia is a powerful force, and there are a whole host of cognitive biases that conspire to keep us from changing our minds, our exposure, or where we choose to wait -- even when the evidence at hand suggests it would be prudent to do so.

My daughter's story reminds me of an experience I had back when I was in college. I was driving and my good friend was in the passenger seat. Traffic in our lane came to a complete stop. But it was smooth sailing in the adjacent lane. After waiting for a few minutes, my friend asked why I didn't change lanes.

We went back and forth for a bit and his quotable, good-natured response to my rationalizing inactivity was that changing lanes at that point "would be too much like right."

I don't advocate change just for the sake of change. If something is working, we need to stick with it. 

But if adjusting our position feels "too much like right," we can use that as a signal that it's time to stop waiting and take some action. 

 

 

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