Intuition is not something that can be taught, but it can be developed over time if you pay attention to your experiences and connect them to outcomes where you just had that feeling that an outcome was going to occur. I’ve never taken a class or read a book on how to develop your intuition so I’m speaking totally from my own experiences here.
That little voice inside me always spoke loudest when I knew something or had a perspective that the market consensus did not see. It was much harder to recognize when I was young because I had not logged enough repetitions of connecting that feeling to an outcome. And it’s just as important to note when you thought you had a unique concept or perspective, but it didn’t turn out the way you thought. How did your little voice mislead you? I have often found that my little voice has a greater chance of being wrong when I had a pre-existing bias. The important point here is to reflect on and learn why that little voice sometimes misleads you and also why it’s right. Thoughtful, self-reflection will aid you over time in developing intuition.
The investment management business is a very difficult business because it involves making many decisions about future outcomes. No matter how much detailed research work you do, you will never know everything, so you are always dealing with very imperfect decisions and outcomes. If you make the right decision 55% of the time, you are doing very well. You can even be wrong over 50% of the time and still do well if you bet large when you have strong conviction and use your intuition to make an out-sized bet. As an example, in a simple 10 stock portfolio, you might have 4 ideas that outperformed the market and 6 that didn’t. But if the performance of those 4 stocks was on average +50% while your 6 losers only lost 5% you have a really good outcome. In fact, a secret of successful equity investing that most people don’t know is that it’s usually 2 to 3 stocks that drive performance in any given year. Those that trusted their intuition and bet larger on their higher conviction positions are the winners. It’s imperative if you want to be a successful investor that you learn to trust that voice when it’s screaming at you and press your position weight when the opportunity arrives.
When I lecture to our students at California State University, Fullerton, I often talk about how important it is to get to an idea fast and work “up the curve.” What does that mean? It means that when you identify the key reasons to own an equity, those key reasons that are close to time zero have incredible amounts of information value. They are often simple thoughts, but simple thoughts that have not been identified by the Street yet. The “up the curve” definition means that as you are close to time zero on the investment research process, those concepts and information have a high value in terms of the information value they possess which should translate into an urgency to act because you can earn a very high economic return. As you move out the time horizon, incremental information is less and less valuable (down the curve) and doesn’t possess the same amount of urgency or value or sway in your decision.
The window when you have this up-the-curve information closes quickly because the Street will be on your 6 before you know it. What is the difference between great investors and mediocre investors? Those investors that are willing to trust their intuition and move quickly, decisively, and with a high conviction-weighted bet will be the winners. But that action doesn’t get there if they don’t listen to the voice that is telling them to move—NOW!
Keep track of your thoughts and feelings as your investment career advances. Learn from others. You can learn from their mistakes as well as their successes. Get into their heads and ask them why they did what they did and what they were thinking in the moment. It’s important to keep having an internal dialogue with yourself as you learn from your own experiences and those of others. What young investors can learn from their elders is not to frame risk. The elders in the investment business just by virtue of the time they have invested in their career have had plenty of losing investments. The good ones can describe went wrong and they can help you frame the upside and downside of your investment.
As a beginning investor who wants to become a true professional investor, you learn some very basic financial skills and concepts that are an excellent foundation for you to start your career. Like building a house, you need that foundation. But I can tell you that your ultimate success will not be how great you are at analyzing income statements, cash flow statements, and balance sheets. And don’t get me wrong, I analyze them all the time. But your best decisions, at least most of the time, will not hinge on the reported financials. It will hinge on trusting that one moment in time (and hopefully several of them in a career) where you stepped up to the plate and made an unconventional, uncomfortable, and perhaps unpopular decision. These are the moments that can make or break your performance in any given year or years, and maybe even make your career. This window is where you bend your own destiny.
And while I’m writing about the investment management business, all of this applies to other kinds of life and business decisions. You see it in professional sports all the time. That key play call that turned a game or a change in the lineup that turned a game around. That moment is everything, and that is why developing and trusting your intuition is so important. When the window of opportunity opens, it usually doesn’t stay open for long, A key decision by you when that window is open can mean the difference between massive success and mediocrity or failure. Of course, we all want to choose success, but it won’t happen unless you learn to trust your intuition. Don’t be a “Do Nothing,” risk-averse person. If you want to be successful in investments, you have to learn to deal with risk. “Risk-averse, Do Nothing” people never succeed except for being exceptionally great at being mediocre. I could make the same observation about life, but I’ll leave that to others that do life-coaching.
And it is with that thought that I would like to leave you with one last story to drive home the point I am making with this extended essay. It happened in the 2025 World Series between the Los Angeles Dodgers and Toronto Blue Jays in what had to be the greatest World Series I have ever seen. Many, many years from now, people will look up past World Series Champions and see that the Dodgers prevailed and won their second straight World Series title, becoming the first team to repeat in 25 years. But the story behind how the Dodgers prevailed will not be told in a simple summary of game statistics. It’s that story that I would like to relay.
While we all know the outcome of the series, had you not known the outcome and looked at the summary stat’s, hands down, you would have said the Blue Jays must have swept the Dodgers or won in 5 games. The Dodgers were out hit with a batting average of .203 versus the Blue Jays at .269. A major league hitter who bats .203 is soon destined for the minor leagues. The Dodger’s earned run average was 3.95 vs. the Blue Jays at 3.21. The Dodgers scored 23 runs in the Series, and the Blue Jays scored 33 runs. The Dodgers were out-hit, out-pitched, and out-scored. After 5 games, the Dodgers found themselves down 3-2, one game away from losing the Series, and they looked like they were playing their worst baseball all season.
Dodger manager, Dave Roberts, felt he had to do something to try and turn the tide. So, one game from elimination he decided to start Miguel Rojas. Rojas had typically been an off-the-bench, veteran utility player. His start in Game 6 would only be his second start of the 2025 post-season. When asked why he started Rojas, Roberts stated his decision came down to his trust in veterans to bring intensity and energy to a high-stakes win-or-go-home environment. There were no statistics to cite, just a gut feeling about Rojas who had been a reliable off-the-bench performer. Given that he was in the latter stages of his career, Rojas was not someone that you would put in the starting line-up day in and day out. But this was not just another regular season game.
What happened? The impact of that decision, maybe not solely, but certainly was a decision that dramatically affected the outcome of the series. In Game 6 with the Blue Jays threatening to score and the Dodgers with a thin 3-1 lead, Rojas fielded and awkward throw from left field to end the game in a double play and force Game 7. In Game 7, with the Dodger down 4-3 and down to their last out, Rojas went to the plate and hit the tying home run to send Game 7 into extras innings. The Dodgers would later go ahead 5-4 in the top of the 11th on Will Smith’s home run and hold off the Blue Jays in the bottom of the 11th to win the series.
One player, one decision, and a whole different outcome. No statistics, but perhaps a fact pattern to Rojas’ history of being a veteran and an effective off-the-bench player. As Rojas rounded the bases during his game-tying home run, the announcer stated that Dave Roberts trusted his gut.
I love re-living this moment because I’ve been a Dodger fan since I was kid, but I’ve come to appreciate it even more given the courage Roberts had to make this decision. It was based on over 30 years of being in the game and having an intuition about what might turn the tide. And while there were some fact patterns that Roberts considered, most likely, the decision came down to an intuitive feel as to what he could do as manager to bend the outcome of the 2025 World Series.
I leave you with that, if only because it demonstrates how powerful “gut-feelings” and “intuition” can be when making big decisions. There certainly were other Dodger players that made key contributions to the Dodgers repeat World Series win, but it’s probably not arguable that had Roberts not started Rojas in Games 6 & 7, the Dodgers most likely would have lost the Series. A small move with a big outcome. Never underestimate how powerful timely, intuition-based decisions can be and getting comfortable with those decisions are often not based on tons of supporting data and facts.
This is what happens in investing and life in general. Timely decisions based on relatively small amounts of information can often change a career and a life. Learn to listen to that little voice and track it’s accuracy over time. Don’t be afraid to trust and take a risk. Too often, I see people view risk as downside and therefore it has a negative connotation. By all means, make the effort to take thoughtful and intelligent risks and use an elder or someone who you respect to help you frame the pro’s and con’s. But if you fail, don’t view yourself or your decision as a failure. Just view it as learning and then move on. Your next decision will probably be better because you’ve learned something.
If you read this entire article, thanks, and I hope it helps you frame the place intuition has in your investment decisions as well as large life decisions we all face from time to time.
Best of Luck Always!
JVH