These are unpredictable times for the economy, as we deal with persistent inflation and higher interest rates and what seems to be unfolding as an office real estate crisis and head into the debt ceiling deadline and prepare for what will undoubtedly be a knock-down, drag-out budget fight, and perhaps a government shutdown, in the Fall. The fiscal fight inside the government will probably end up being a non-event once we smooth out the charts to cover several years, they usually are, but it’s predictably unpredictable. That doesn’t mean we should be betting on the outcomes… especially if we have strong feelings about one political party or another, because those feelings breed an unhelpful brand of faith-based certainty. As investors, long-term success comes from making rational decisions, most of the time… not from trying to predict what will happen during the latest political crisis, regardless of how certain we are that one side is right and the other is wrong.

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain

Stick with what we can know… be diversified, own companies that you understand and can rationally put a value on (and if you’re speculating because of a great trajectory for a currently unprofitable business, or great future potential in an obviously overvalued business, try to keep the position smaller).

In times of uncertainty and widespread stress among investors, knowing what you own, and why, is the ultimate security blanket — some of these stocks could drop 20% in a day for no real reason, or 40% in a few months, sometimes much more, and that’s when you’ll need to pass the test: Do I understand this company well enough, and have a clear enough vision of how their business works and why I want to own it, that I can hold on when everyone else is rushing for the exits, or maybe even buy more when the price gets irrationally low?

And part of that is the one absolute certainty in investing: You will be wrong sometimes, and making those mistakes is the price you pay for being right sometimes. Because of the long-term magic of the lopsided risk-reward setup of the stock market, being right earns you more than being wrong costs you, over time (you can only lose 100% if you ...