Say what you like about hedge fund manager Bill Ackman but, after losing around $400 million from an ill-timed bet on Netflix Inc., he was quick to exit the position in April and own up to his mistake. In the wake of Netflix’s disappointing subscriber growth, Ackman said he was no longer able to confidently predict the streaming company’s prospects and “100% ready to admit when I’m wrong.” If only all of the investment community was as willing to disavow dogma when market prices undermine financial theology.
Rising interest rates and surging inflation have laid waste to speculative bets, hobbled pandemic winners and destroyed trillions of dollars of investor wealth this year. This seismic shift is forcing investors and entrepreneurs to reassess previous beliefs and investments. Hedge fund managers and venture capitalists are suddenly talking a lot about “humility” and doing plenty of apologizing, or at least they should be. “Markets teach. The lessons can be painful,” as Amazon.com founder Jeff Bezos put it.