What WWE teaches us, can help us have better portfolios
Updated: Jan 2
WWE was massive.
If you were an 80s or 90s kid, you breathed WWF/ WWE.
Know anyone that still watches it? No? How are they still around? How does this affect me as an investor?
So here is where they are at now:
WWE is NYSE traded & worth over $3B today.
It beat analyst expectations 8 quarters in a row.
It made close to $1B in 2019.
But why did we discount them?
A bias – probably one of our most costly ones.
Its called –
The False-Consensus Bias.
What it means -
We overestimate how we and our circles, our beliefs, and our habits, are representative of the population.
We underestimate how large the population we don’t below to is.
How does this affect us as Investors?
Often, Investors tend to pass off investing opportunities simply because they don’t know enough about something, usually citing a sheepish - ‘I don’t know if I can add value to this’.
Though a slight effort in knowing more could help see a new picture, it’s not a comfortable zone to make decisions for them.
They end up sitting on anti-portfolios till they become home-runs (remember Ring/ Google) for someone who put in that effort.
I think biases and heuristics have a large role to play in our decision-making. But acknowledging that they do can be a great first step at what we can do to stopping it affect great things from happening.