“First, assume automatically that you’re early. It’s about the easiest thing to do, just to say, no matter what: I’m early.”

– Ian Clark, Dichotomy Capital 


As an investor, one of the toughest things about investing in public markets (as opposed to real estate or private businesses) is that after you buy a stock, prices update constantly and mercilessly. While some of us claim to pay no heed to market prices for weeks or months, the knowledge that the latest price is just a quick Google Finance search away is increasingly too tempting to ignore.

We can almost feel our carefully researched investment thesis morph to rationalize near-term price movements. We anchor ourselves not to our view of intrinsic value but rather to our cost basis.

Ian Clark, Managing Director of Dichotomy Capital, throws this idea on its head:

Instead of letting price changes happen to us, Ian advises us to anchor to the assumption that we are automatically early. Personally, whenever I make a securities purchase, I assume the price will be substantially lower in the near future, preparing me to react to any upcoming volatility with a greater sense of preparation and sanity. This approach works if the facts are the same. As Ian mentions, if the facts change, we need to reassess. Mindless dollar-cost averaging lower (e.g. what I did with Research in Motion/Blackberry in 2011) just because prices fall without reanalyzing the company is bonkers.

Additionally, Ian explores his short position in the offshore drilling space in the run-up to the oil crash. As order books of shipyards swelled for years, they caused tremendous pain for short sellers up until their tipping point in 2015. Ian’s comments on the energy space, unlike the industry itself, are insightful, logical, and measured. I highly recommend watching the entire interview, which is available to members of The Manual of Ideas.