The One Investing Rule You Should Break
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One piece of investing advice you’ll hear all the time: Never get emotionally attached to your holdings.
It’s one of the cardinal sins of investing—attachments can cloud your judgment and lead to costly mistakes. But in reality, our emotions play a much bigger role in investing than we like to admit, and it’s not all bad.
Think about what initially attracts you to a company. When you stumble upon a stock that catches your attention, there’s usually an emotional response—something about the business that excites you.
Maybe it’s the numbers (at minimum, the numbers should be worth getting excited about). Maybe it’s the brand image. Or maybe it’s a sense of nostalgia if the company has been meaningful in your life in some way.
No matter what it is, if that initial spark leads you to dig deeper, and everything checks out, that emotional connection only grows. It's the reward of the hunt, and by the time you pull the trigger and invest, there’s a good chance you’ve developed at least some attachment to the company.
In theory, you’re told to avoid this. But in practice, it seems impossible. Even Warren Buffett—arguably the most disciplined and stoic investor of all time—has had deep emotional ties to some of his biggest investments.
Look at GEICO, for example. Buffett’s connection to the insurer started while studying under Ben Graham—his hero—who owned a large stake in the company.
Buffett visited GEICO early in his investing career on a random, rainy weekend, where he met with Lorimer Davidson (who later became CEO). That conversation—which lasted multiple hours—left a lasting impression on Buffett, and years later, Berkshire Hathaway ended up buying the entire company.
We can also look at The Washington Post as another example. Buffett bought a large stake in the company in 1973, but this wasn’t just another investment—it was deeply personal.
When he was a kid, living in Washington D.C. while his father served in Congress, Buffett had a paper route delivering The Washington Post. Decades later, when he had the opportunity to invest in the company, it’s hard to believe nostalgia didn’t play a role.
And of course, there’s Coca-Cola (KO)—probably Buffett’s most famous and most referenced investment.
When he was a kid, one of Buffett’s first entrepreneurial ventures was selling soda door to door. He would save the bottle caps from each sale, tally them up, and use that data to determine which soda was the best seller.
Years later, when he made Coca-Cola one of Berkshire Hathaway’s cornerstone holdings, it wasn’t just about the numbers. There was a lot of history there—and a regular habit of drinking five sodas a day—which created an undeniable emotional connection.
In each of these full-circle investments, Buffett didn’t let his emotional connection get in his way or cloud his judgment. Instead, he used it to his advantage.
Because he had such strong ties to these companies, he understood them at a much deeper level. And that conviction gave him the patience and the wherewithal to hold on to them through thick and thin.
I think we all have at least one investment like this. Personally, I feel a certain attachment to VICI Properties (VICI).
Living in Las Vegas, owning shares of VICI feels like owning a piece of home. It’s a company I get to experience firsthand on a daily basis, and that familiarity makes investing in it more meaningful—and more understandable—to me.
And in an interesting way, that attachment is part of what makes it such a fitting investment. It brings VICI closer to the center of my Circle of Competence—something Buffett has always emphasized.
I think that’s part of what makes investing fun. While the numbers are an essential part of the equation, there’s more to it than that—it’s also about putting your money into businesses you believe in, care about, and feel connected to.
But, of course, there’s a balance. While this emotional attachment can have its applications, it can also cloud your judgment.
If the fundamentals start to deteriorate, and if the business is changing for the worse, you need to be rational enough to recognize those warning signs. And upon seeing them, you need to act accordingly.
At the end of the day, investing is both a numbers game and a personal experience. Overall, you should embrace the companies you love—just make sure that love doesn’t blind you.
With that said, I want to hear from you: Do you have an investment that feels personal to you? What’s the story behind it? Write to me here and let me know.
And if you want to find out exactly how much money I’ve made with dividend investing since I started 5 years ago, check out this video here.
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It's Time For Investors To DIG IN | Ep. 12
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“What are your favorite recession-proof/defensive stocks?"
- @twigsetiawan | YouTube
This is a great question—especially in today’s environment!
When it comes to recession-proof stocks, you generally want to look for companies whose sales are less likely to be impacted by economic downturns. In other words, what products or services will people continue to use no matter what’s going on in the world?
There are a handful of companies that fit that description, but three that immediately come to mind for me are:
Procter & Gamble (PG): This one is probably the most obvious. No matter what’s happening in the economy, people still need toothpaste, toilet paper, diapers, soap, razors, dish soap, and other daily essentials.
Because of that, Procter & Gamble is well-insulated from economic turbulence. As a substitute, you can also look at Clorox (CLX), Kimberly-Clark (KMB), or Colgate-Palmolive (CL)—they’re all in the same boat.
Johnson & Johnson (JNJ): No matter what, people still get sick, and people still get hurt. JNJ is well-diversified across pharmaceuticals and medical devices, so their sales come from two industries that are always in demand.
Plus, their balance sheet is rock solid. The Net Debt to Free Cash Flow ratio is only 0.6, which means they generate more free cash flow every year than they have in net debt. So you don’t have to worry about JNJ going bankrupt anytime soon.
VICI Properties (VICI): Believe it or not, VICI has proven to be highly recession-resistant. During the last big economic downturn in 2020, they collected 100% of rent from their tenants and maintained a 100% occupancy rate—a perfect score, and better than most other REITs.
In the REIT sector, Realty Income (O) and Agree Realty (ADC) are also solid defensive options—you can’t go wrong with those either.
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