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Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better.

Today's Issue Read Time: <2 minutes

• Lesson: Why hindsight bias can distort our views of reality
• Timeless Content: The September effect, explained​
• Thread: How to review earnings
• Resource: A free ebook on DCF modeling
• And more!

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Friends,

On April 9, 2020, Canadian comedian Julie Nolke hit the big time. In the first of a series of YouTube videos, she attempted to explain the pandemic to her January 2020 self.

A small sampling:

The series continues with further visits detailing the George Floyd protests, the specifics of January 6th, and so on. What makes the videos so effective is the youthful ignorance of each "past" version of Julie.

The problem: we fail to see ourselves in these past "Julies."

The psychological name for this is the hindsight bias: we convince ourselves that past events were perfectly predictable before they occurred.

Read a diary from a New Yorker on September 10, 2001, or a European celebrating the end of the War-to-End-All-Wars in 1918, and you'll be reminded of just how unpredictable the future is.

This past week, the Federal Reserve cut rates by 50 basis points -- the first cuts in roughly four years. Some believe this is a bullish sign for the economy, and spending will accelerate with cheaper credit. Others believe it is a bearish sign, as rate cuts only happen right before a recession.

No matter how it turns out, you can be assured that there will be a chorus declaring, "See -- I told you so!"....as is to say that everything is about to unfold was perfectly predictable.

Our edge for long-term success comes from remembering that we'll always be the January 2020 Julie. We're unaware of what's around the corner, and we've prepared accordingly -- living below our means, and investing in wide moat businesses with acceptable valuations.

Do that consistently, and you won't ever need to predict what will happen next.

Wishing you investing success,

Brian Feroldi, Brian Stoffel, & Brian Withers Long Term Mindset

P.S. Did you consume any great investing content this week? Reply to this email with a link. We'd love to read it.

One simple graphic:

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One piece of timeless content

Have you heard that September is the worst month for stocks? This article breaks down the history of this phenomenon and a few theories on what causes it.

One thread

Brian Feroldi @BrianFeroldi 1/ How to review quarterly earnings 🧵 A step by step guide using $DXCM as an example ⬇️ 9:21 AM • Feb 14, 2021 341 Retweets 1978 Likes Read 64 replies

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One resource

Are you a visual learner? If so, check out this free ebook by Dave Ahern. It contains 10 infographics that explain how a DCF model works visually.

One quote

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