Dealing with Mistakes

Making mistakes in the world of investing is normal for all levels of expertise. The mistakes may have been within the bounds of the investment strategy, negating the argument that any fundamental problem  may have been at hand. In that context, its even possible there is a relatively low possibility of any net marked improvement. On the other hand, higher risk frameworks – or rather those without due consideration for the net risk relative to return accumulated over an extended period (recency bias may play into this), means the mistake being made is a fundamental
problem or part of a broader framework of poor or imprudent decision-making.

For both types outlined above, reflecting upon the aforementioned mistakes is no rarity, and makes sense. However, let it go too far, and it starts to cause harm.

In the business world, unfortunately, the rear-view mirror is always clearer than the windshield.” 

-Warren Buffet (1991)

Everybody will make mistakes. It is what you do about it that matters. That means not dwelling on the issue for too long. Highly ambitious individuals will often do this, sacrificing time spent looking ahead by over-analyzing past mistakes.

Another thing that ties into this general conversation of the psychology of mistakes and obstacles: it lends to look at the path, rather than over-utilizing time concerned about the obstacles. A popular speaker has talked about this using the example of skiing off-piste. When focusing on the path, one is less likely to collide with a tree. On the other hand, focusing on the trees has a higher probability of one crashing into a tree.

Have a clear strategy for dealing with mistakes and obstacles where over the long term you can establish a highly positive trajectory. Avoiding the issue altogether is bad, but don’t dwell too long either if it is not reaping any progress. Certainly, many just totally disregard errors made, which is on the other end of the spectrum of where this article was focused on.