This is a link to Barry Ritholtz recent article on how to be wrong and move on. He applies it to trading, but the same philosophy could be used at anything. Admit your mistake, correct it and move on without dwelling on it. It helps not having a big ego – a rarity among the trading kind.

What does NOT admitting error look like? It is Apple investors, who double up all the whole way down from $700 to $400. It is the radical financial deregulators like Edward Pinto & Peter Wallison blaming the financial crisis on unrelated bank loans to poor minorities. It is the cacophony of excuses from the Gold community, blaming the 30% drop on central banks, Goldman Sachs, “paper” gold, the shorts and the dollar. My friend Albert Edward’s reiterated call for S&P500 at 450 — with the SPX kissing 1600 — smacks of a classic non-admission of error. His preference is to go down with the ship.

I would also include another category to this group: those who trade on political inclinations rather than on reality. John Paulson, one of the goldbugs (and a Romney donor) who saw his fund lose 27% last month (and 47% YTD) is one of those sophisticated guys who are no different from Glenn Beck, betting on the apocalypse. Why do they bet on the apocalypse? Because Obama is a socialist, thus the economy cannot possibly recover during his term. Although, I have to give John Paulson some credit – at least he bets his own money on entrenched personal sentiments. Glenn Beck types first scare regular folks about the upcoming Armageddon and then simultaneously peddle them gold coins. Nice, full-proof business model.

But still, I’m puzzled, and even fascinated how smart guys can be so blinded by political hatred that they allow it to envelop their thinking. John Paulson is not a stupid guy: he made billions betting against subprime in 2007-2008. How could guys like him not have put two and two together? For the last 3 years it was obvious to me that Bernanke will keep his foot on the QE gas pedal for as long as possible, and given the abject economic situation in 2009-2010, one could safely say that it’s going to be years, not months. This simple fact guided my being long stocks and withstand all the ups and downs. You don’t have to have a PhD to see what was going on. Whether QE is good or bad is secondary to this discussion: guys like Paulson don’t care about social implications when they make money; they only bring up social implications when they have lost all other arguments. Zerohedge guys, another famous goldbugs, are now annoyed to find out that without QE the market would have stayed flat. They want QE ended immediately because it was so successful and thus prevented their luddite, gold-obsessed worldview to be realized in real life! WTF?