Do the Opposite
On the mega hit show Seinfeld, George Costanza, after many years of bad decisions, has an epiphany as he decides to try and do the opposite of his instincts given that his instincts have failed him again and again. And, it works. He gets a date and a job with the New York Yankees.
Jerry Seinfeld: If every instinct you have is wrong, then the opposite would have to be right.
George Costanza: Yes, I will do the opposite. I used to sit here and do nothing, and regret it for the rest of the day, so now I will do the
opposite, and I will do something!
George Costanza: [He goes over to the woman] Excuse me, I couldn’t help but notice that you were looking in my direction.
Victoria: Oh, yes I was. You just ordered the same exact lunch as me.
George Costanza: [Takes a deep breath] My name is George. I’m unemployed and I live with my parents.
Victoria: I’m Victoria. Hi.
While this scenario is purely fictional, we use it to highlight a theme during periods of volatility such as what we experienced during the first quarter of 2022. Doing the opposite with investing is not quite as simple as George’s choice, but it does help illustrate that if one can control their emotions, they will therefore be apt to make higher quality, less emotional decisions. Although it is overused, the idea of staying the course, or what highly successful portfolio manager Bill Miller calls “time arbitrage,” is indeed a highly valuable idea. There are many studies that have shown most individual investors buy high and sell low, and therefore fail to realize market index returns.
