It's OK to Be Wrong

Gary is currently the managing partner and chief investment officer of Silver Ring Value Partners, an investment firm that focuses on long-term intrinsic value investing. He has more than two decades of portfolio and asset-management experience plus degrees in computer science and economics from the Massachusetts Institute of Technology ("MIT")... which is where he received the advice that shaped his career.

Gary used to make rookie investor mistakes – like losing his shirt after putting all his money into a hot stock that tanked. But when Warren Buffett came to speak at Gary's alma mater, his words put the ambitious young man on a path to learn value investing instead of "gambling around with tech stocks."

Today, Gary has his own priceless advice to share with our listeners, such as keeping a well-diversified and allocated portfolio. He warns against blindly chasing the price action and stubbornly allocating half of one's portfolio to the biggest position...

I would say the goal there is to make sure that no one position can really sink the ship... It's good to have conviction, but you need to make sure that your process over time – which drives the outcome – is not in any one position.

But having conviction isn't entirely a terrible thing. As he explains, it's all about maintaining the "delicate balance"...

You have to be sufficiently flexible to adjust to the reality of the changes but have sufficient conviction... [so] you don't fall to the market's pressure.

During their conversation, Dan and Gary delve deep into the common psychological pitfalls that can come with investing. Gary also discusses the importance of exercising caution by playing "behavioral defense" amid a sea of folks who too often rely on "behavioral offense." He even shares his proprietary "thesis tracker" – a unique way to evaluate the performance of every investment in your portfolio.

Finally, Gary leaves us with the No. 1 trait he says every investor should have: humility...

You want to be humble in this business... Base your approach on humility and then work really hard from a position that you can be wrong a lot, and then build that being wrong into everything.