As I have mentioned before, I have, for nearly two decades, self-managed our investments. And as part of that process I do a bunch of reading, although, as the years go by and I learn to separate the fools and those talking their book from the truly wise, the list of authors gets smaller.
One of those I read is Howard Marks, one of the wisest of the wise. Marks often talks of second level thinking, and how, if more of us did more of it, the world would be a better place and fewer people would have shitty—I said that, not Marks—outcomes in both investing and life.
Here's Marks on second level thinking as it applies to investing:
First-level thinking says “it’s a good company; let’s buy the stock.” Second-level thinking says, “It’s a good company, but everyone thinks it’s a great company, and it’s not. So the stock’s overrated and overpriced; let’s sell.”
First-level thinking says, “The outlook calls for low growth and rising inflation. Let’s dump our stocks.” Second-level thinking says, “The out-look stinks, but everyone else is selling in a panic. Buy!”
Of course, the classic recent example of a win for second level thinkers was the March low in stocks, followed by a massive snap back. First level thinking resulted in selling into the dip and second level in buying.
Second level thinking is hard, but also well worth it, because even if we only manage to do a little—I struggle all the time—we can still profit.
Anyway, enough with investing, let's look at applying second level thinking to offshore voyaging: