We invest because we believe in something, we agree about something, we understand something.

We invest because we believe that we know something more than others, that we found an opportunity others don’t.

Here is the problem. The idea of understanding a business without really running it, is an arrogant act. There is always an “X” factor we don’t know that we did not include in our calculation. If everything were able to be calculated so easily, everyone would have been a great investor.

Investing is an arrogant act. And it’s okay. As long as we understand the fact that we might miss out something, it makes us careful and humble. If we are not aware of the possible flaws in our argument and judgement, it makes us arrogant.

We should be stubborn and confident entrepreneurs (sometimes), but we shouldn’t be stubborn and arrogant investors. Each role requires a different way of thinking. You know what makes it difficult? Most entrepreneurs are also investors and we sometimes forget that we are in a different role.

“We regard investing as an arrogant act; an investor who buys is effectively saying that he or she knows more than the seller and the same or more than other prospective buyers. We counter this necessary arrogance (for indeed, a good investor must pull confidently on the trigger) with an offsetting does of humility, always asking whether we have an apparent advantage over other market participants in any potential investment. If the answer is negative, we do not invest.” – Seth Klarman, Baupost Group