Often, when looking back at past investment decisions, we allow ourselves to make the mistake of outcome biasness. This is where we use the outcome to determine the validity of our decisions. While the outcome may be a failure, does it necessarily mean we made a bad decision? In this article, I would be using my investment in Petrobas as a case study.

Petrobas Investment

We initiated a position in Petrobas at roughly USD7.10. Seeing the run up in prices and shifting our investment mandate to focus purely on investment opportunities in Asia, we sold out our position at USD9.69. This translated to a investment return of +36.5%. Fast forward today, it is currently trading at USD4.92, translating to an unrealized loss of 30.7%.

This got us thinking, so was our investment decision right or wrong? With the run up in prices initially, I did believe that ...