Bill Cara

My Jim O’Shaughnessy mantra

May 11, 2023

From The Mikolay Letter archives


Jim O’Shaughnessy is the Founder, Chairman, and Co-Chief Investment Officer of O’Shaughnessy Asset Management. He’s the host of Infinite Loops, a podcast with Jamie Catherwood, and he’s the author of four books on investing, including Invest Like the BestWhat Works on Wall StreetHow to Retire Rich, and, Predicting the Markets of Tomorrow.

I recommend reading or listening to this piece frequently as a centering tool to reduce stress, increase focus, and make better decisions.

(7:25 listening time using MS Word Review Read Aloud feature)



Successful investing is simple, but it’s not easy…

  • There’s no sure thing, and there’s no secret to success
  • And there’s a lot we know that just ain’t so

Humans are designed to be bad investors…

  • We’re crushed by uncertainty
  • We’re not disciplined when things are bad
  • And we’re emotional when our money’s at stake

Worse yet, we remember things that didn’t happen…

  • We see things that aren’t so, and forecast things we don’t know
  • We panic, chase phantoms, and get caught up in greed

Successful investing defies human nature…

  • It combats quirks of the mind
  • It adopts external fail-safe measures
  • And it sticks to a plan
  • (The last sustainable advantage is to arbitrage our nature)

Check your ego and search for the truth…

  • (Truth doesn’t abide a big ego)
  • Have a beginner’s mind and keep it wide open
  • Happily accept most of your beliefs are wrong
  • Recognize how little you actually know and admit it
  • The smartest of the smart are often the least arrogant

Be brutally honest with yourself…

  • Know who you are
  • See yourself clearly

Actively develop a strong mental attitude…

  • Don’t concern yourself with what others are saying or doing
  • Don’t attach self-worth to things people aspire to
  • Allow yourself to be self-reliant and free of illusions
  • Have agency and control your own fate
  • Above all, believe you can do it

Think long-term…

  • Take the long view on returns
  • Do not overweight short-term events
  • Do not succumb to short-term volatility
  • Pay attention to what might happen in ten or twenty years

Unglue yourself from the present…

  • The future flows from the past, and cycles repeat, with variations
  • Read original books, journals, news articles, and diaries from other eras
  • Focus on the ones that ring true
  • Study how markets have behaved and what moved people to act, believe, and behave the way they did

Learn, learn, and learn some more…

  • Read broadly outside of finance
  • Read more than almost everyone else
  • Study as much as you can about investing
  • Seek to understand those you might have an aversion to

Build on what you learn…

  • Sort out gems of knowledge
  • Separate wheat from the chaff
  • Make a never-ending commitment to gain knowledge
  • Read, synthesize, abandon ideas that aren’t working, try new ones, read some more

Challenge your own beliefs…

  • Don’t wed yourself to an idea or cling to a treasured belief
  • Constantly and ruthlessly challenge each belief, no matter how basic
  • Guard your brain from noxious ideas living there rent-free
  • The more certain you sound, the less certain you should be

Discard beliefs that are no longer useful…

  • Ruthlessly remove bad ideas and advice
  • Improve your mental maps by deleting misperceptions
  • Throw away poor filters and replace them with better ones

Ask why a lot (then keep asking why)…

  • Doing so uncovers a lot of bad beliefs
  • Continually ask “Why do I believe this?”
  • Continually ask, “Am I seeing things correctly?”
  • People who don’t ask questions don’t get answers

Challenge conventional thought…

  • Most historical beliefs and commonly accepted “truths” have been wrong
  • Many of a today’s cherished beliefs are castles built on sand
  • Don’t accept these default settings
  • Remove yourself from the dominant thinking of our era

In other words, don’t follow the crowd…

  • Be willing to hold uncomfortable opinions
  • Make your investment portfolio very different than the market
  • (Just know this will create far higher career risk than the alternative)

Document your thoughts…

  • Keep a handwritten journal
  • Consistently record decisions and beliefs over time
  • Write about every worry, frustration, and uncertainty you’re experiencing
  • Date it, put it away, and review your written observations later
  • You’ll be surprised how you think after the pressure and emotion have dissipated
  • And seeing things in your own handwriting makes it difficult to fool yourself

Be dispassionate in your judgment…

  • Maintain a “we’ll see” disposition
  • Never let emotions dictate decisions
  • You can negate your entire track record by just once emotionally overriding your investment model
  • Real discipline kicks in when things are going against you, sometimes significantly

Search instead for a methodology that’s…

  • Simple
  • Passive
  • Concrete
  • Cohesive
  • Consistent
  • Systematic
  • Explainable
  • Rules-based
  • To the point
  • Time-tested
  • And quantitative
  • (Don’t believe willpower will allow you to overcome your fears and emotions)

Enjoy vivid stories, but ask for proof…

  • Invest in dull facts
  • Apply analytical tests
  • Favor reams of statistical data
  • Look for evidence that odds are in your favor
  • Prefer impersonal statistics to descriptive data
  • Prefer options that have a huge amount of empirical support
  • Prefer experimental evidence over received wisdom that sounds good

Don’t chase sugar highs…

  • Ignore predictions
  • Don’t watch television news
  • Don’t pay attention to financial forecasts
  • Distractions sap your mental and even physical energy
  • People tend to take recent events and forecast similar returns into the future

Look for rare, favorable, and fortunate circumstances…

  • Look for potentially unusual and random circumstances
  • Recognize when a situation not of your own making is conducive to a favorable outcome

Take advantage of the spot Karma places you…

  • Smart luck involves awareness followed by action
  • Jump in, act quickly on knowledge, and try things
  • Even if circumstances are ideal, you still need to take advantage of them
  • You can be in the right place at the right time and still make the wrong choice
  • Favorable conditions are meaningless if you don’t fight hard


  • Remember, this too shall pass
  • Persist even after you’re knocked down ten times
  • Continue on in a rigorous, unemotional, and consistent manner

Enjoy and embrace the music while it lasts…

  • Be a pragmatic optimist
  • Even if you’re wrong, you’ll enjoy life a lot more
  • Be open, be kind, treat people well, and Karma will get your back