We are all hostages to our upbringing and heritage. We may rebel against our parents but deep down much of what they think is imprinted on us from an early age. Our views about risk, taking chances, entrepreneurship, the proper conduct of ones life and affairs, where we live and even how we drive a car is set at a very early age.

What we need to do is accept that our way of looking at the world can create intellectual blind spots when it comes to investing.

For example, we may have been told from an early age that investing in equities is simply a form of gambling: no better than a wild weekend in Las Vegas. Or we may have been told that “cash is trash” and that one always needs to have one’s money at work. Or perhaps we have a gold bug in the family (or someone who finds the metal to be a “barbaric relic”).

    Ask yourself…would you invest in:

  • A company listed on a foreign stock exchange?
  • A tobacco company?
  • An airline?
  • A company with no earnings?
  • A social media company?

I have heard investors tell me that each of these asset classes were “untouchables” at one time or another. I am hardly immune. In the wake of the Asian Financial Crisis, the market capitalizations of several airline stocks in Asia were not much greater than the fair market value of a couple of their 747’s in their respective fleets of new long haul carriers. In the case of Cathay Pacific, I seem to recall that the company was even still operating at a small profit. Despite being very familiar with Cathay Pacific’s operations and prospects at the time and having several well respected investors point out the merits of the opportunity, I missed out. I failed to invest in the top performing Hang Seng Index component of a strongly rebounding Hong Kong stockmarket the following year because, as we all know: “airlines are lousy investments”. Unfortunately, that is not the only example from my track record.