Whitney Tilson’s Non-Confirmation Bias – The Barnes and Noble Jackpot

I was discussing Whitney Tilson’s Barnes and Noble ($BKS – no position currently) trade with some colleagues.   Tilson was vocally short $BKS recently, but reversed his position and got long in the nick of time, before today’s blockbuster deal with $MSFT which sent $BKS up 100% preopen (50% at the close, as I type this).   Here’s what Tilson said on CNBC this morning:

Cliff notes: he was short the stock, he was thinking about covering, he saw a smart guy (JANA partners) take a long position, he read an interesting long thesis on the VIC website, and ended up reversing his position recently: covering the short and going long.

I was, at first, intrigued, as I’ve written previously about the importance of avoiding confirmation bias.  This will be another one of The Rules eventually, but a key to successful investing and trading, to me, is to seek out conflicting opinions rather than conforming opinions.   When you do this, you can figure out what might be wrong with your thesis, and either gain a measure of comfort if the conflicting views are weakly formed, or change your view if they make a lot of sense.   Tilson did the latter – I respect that.

My colleagues, however, pointed out that this approach is fine for me, but not for a professional money manager like Whitney Tilson.  It’s good that Tilson wasn’t a stubborn idiot and was flexible in his views, but his job is to know this stuff before he reads it on the web!   It’s his job to know the details BEFORE he has a big position.

related:  What American Idol Taught Me About Confirmation Bias



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