The equity chief at one of Wall Street's biggest firms shares his best piece of investing advice

To John Manley, there’s nothing more important for an investor than knowing when to cut losses and move on.

Now the chief equity strategist at Wells Fargo Funds Management, where he helps oversee about $US230 billion, Manley admits he learned this lesson the hard way during the dot-com bubble.

In an interview with Business Insider, the Wells Fargo equity kingpin spoke about the low volatility environment, stock valuations, post-election share moves and the future of the bull market. He also discussed the most important advice he has for anyone starting a career in equity fund management.

Here’s what Manley had to say (emphasis ours):

Be flexible. Don’t be afraid to change your mind. If you’re wrong, change your mind. If you go down the wrong path, and you’re down 10-12%, it’s better to sell down 15% versus 50%. If you have an idea that something is going to happen, you’re predicting the future, and it’s OK to be wrong. Where you can go wrong is by making a prediction that doesn’t come true, and then sticking with it.

I tell people the biggest mistake of my life came in the fourth quarter of 2000. I raised the technology weighting in September, which was a stupid move. But that wasn’t the biggest mistake. The biggest mistake was not pulling it in November when I found out it wasn’t working in October.

Being flexible is incredibly important. You can change your mind. I understand not wanting to flit around, jumping at something little, but you also need to ask yourself if the reasons you’re in an investment are still the reasons you should be. It’s hard for your ego and it’s hard to call clients, but you have to do it.

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