Welcome to the end of the week! Just sit back, relax, and enjoy this weeks roundup of interesting reads in another edition of Happy Hour.
Managing Mistakes
As a kid, you were warned to stay away from the stove. It was hot. It would hurt. Yet, despite the warning, you felt the pain eventually. Everyone did. In that mistake you learned a lesson. Of course, it wasn’t that your parents were right. It was far to early for that one. Rather, the stove has hot things that burn. A simple lesson that caused you far less pain in the future.
That doesn’t mean you were never burned again. Instead, you were able to recognize the threat faster and stop yourself from making it worse.
Having it happen so early in life is an advantage. It was a good mistake to make and you were better off for it. But I can’t say the same for every mistake. It rarely works in investing. You don’t physically burn yourself every time your decisions lead to losses. Instead your mind gets in the way, either you saved yourself from further losses or you blame it on bad luck, bad timing, or the banks.
Anyone who’s ever been involved in sports should recognize this. Teams and players win or lose games. Unfortunately, not everyone gets it. Sit in the stands or listen to sports radio and the referees, the weather, the equipment, or anything but the players gets blamed.
It’s so far from the truth. Less errors and less turnovers, lead to wins. Good coaches understand this. Focus on it. Practice revolves around it. They know that learning from mistakes is an important part to getting better.
Because in sports, like investing, the team that makes the fewest mistakes almost always wins.
Last Call
- Avoiding Stupidity is Easier than Seeking Brilliance – Farnam Street
- Int’l Diversification Is Free – ETF.com
- The Problem with Market Timing – Rick Ferri
- Why Is Calling a Market Top So Hard? – Bloomberg
- I’d Choose Emerging Markets, Wouldn’t You? – Research Affiliates
