I strongly believe if you are interested in being an active investor, what you choose to invest in is often a mirror into your personality and the person you want to be. Other investors will judge you for the things you choose to invest in, and draw conclusions about your intelligence, temperament and even if they want to associate with you. This is probably true of many things in our lives, not just investing, but if you want to make a career in investing, how other perceive you will surly drive some investing choices.
For example, many may be drawn to the rigorous, prudent and cautious approach of the value investing camp. It seems intelligent, wise and synonymous with the the greatest investors in the world, such as Mr. Buffett. The growth investor camp seems audacious, exciting and innovative. Real estate investors seem entrepreneurial and self-made. For many, your personality, or the crowd you wish to hang with will likely lead you to choosing a certain route.
The problem is, deciphering between your intentions to be a good investor, or to be perceived as a good investor is exceedingly hard to do. Meme stock mania is a good example of this. Obviously, many novice investors were interested in the idea of making a quick buck off trading GME or AMC. They started their journey to make money but the more they dug into the narratives they gained other priorities such as sticking it to the hedge funds and diving into conspiracy. They found community, a place where they shared their (often misguided) ideas about the markets and rooted or each other to the point where even after their stocks have been pummeled, they are still some of the most mentioned tickers on social media.
While meme stocks are certainly an outlier example, I think this idea still applies to more sophisticated investment approaches. Have you ever been extolled the virtues of real estate investing? SaaS? gold? bitcoin? or even value stocks? Let's not even discuss ESG. Each of these types of investment has their own narrative to pitch and community to glorify you for participating in that goes much farther than mere reddit clout.
There is no issue with specializing and being better at something, but when you make your identity and all the things that support your identity around one particular investment style you are bound to lose mental flexibility. You start buying companies because you think they are cheap to appease your identity that you see things others can't appreciate, while not taking the time to appreciate other opportunities that might be better. The more you corner yourself to one belief the more your research may start to be an ever-ending loop of confirmation bias. You can see this with bitcoin-maxis, value investors, tech investors and the whole gauntlet.
Even Warren Buffett who probably has more talent than anyone who will ever read this blog post had to learn mental flexibility and move past his cigar but style that he was likely best in the world at.
Strong opinions loosely held.