A friend of mine was telling me about how she struggled with regret, specifically around cryptocurrency. Why hadn’t she sold at the top? Why hadn’t she bought more when it was lower? The questions nagged at her and she would beat herself up about it.
Like her, I didn’t sell at the top or buy more at the bottom. It doesn’t bother me at all, though. What’s the difference?
I think that she and I have different definition of what a mistake is. In any given day there are thousands of publicly traded equities, assets, and commodities. Nearly each one has gone up or down in the past 24 hours, so by her definition, all of us have made thousands of mistakes because we would have been better off buying or shorting them all.
If you are going to count those as mistakes, though, you must count everything else as a triumph. Each breath that kept you alive, each car you passed that you did not accidentally step in front of, each glass of water you drank.
This isn’t a particularly useful way to acount for your successes and failures, though, because it’s impossible to quantify and to a large extent you aren’t in direct control of any of it. Was there information out there that should reasonably have led you to take an action on each stock? Probably not, and even if there was, it wasn’t your job to do so. At the same time, you were going to breathe and not jump in front of cars, so you shouldn’t pat yourself too hard on the back for those.
I have a simpler definition of what is a mistake and what is not. At any given time my goal is to make the best decision I can with the information that is available to me.
I bought cryptocurrency early because I felt like I had special knowledge as a technologist and I felt very confident that it would be a big part of our future. To not buy some would be a mistake by my definition. As the price fluctuates (wildly) daily, weekly, or monthly, I don’t feel like I know anything that other people don’t know. I have usually no idea why it fluctuates. I still believe it will be even important in the future, so I hang onto it.
So if Ethereum plummets by $200 in a day and the reason is either unclear to me or not something I could have predicted, I don’t worry about it. While it would have been beneficial for me to sell it and rebuy, I had no way to possibly know that. Feeling bad about decisions I could not have possibly made is very counterproductive because it distracts me from the decisions which I should be making and it mentally punishes me for something I couldn’t have done differently.
On top of all that, I am very willing to make mistakes and be wrong. If my standard is that I will make all decisions correctly, I will become paralyzed and be unable to make any decisions. Instead my goal is simply to make mostly good decisions, to make as many of them as possible, and to eliminate the chance of total ruin.
If I can take two steps forward and one step backwards every day, that’s a lot better than just taking one step forward every week.
Last, I realize that one of the biggest factors in both my happiness and success will be the mental environment I create for myself. If I’m constantly beating myself up for decisions I couldn’t have possibly made any differently, I will become demoralized. Instead I focus on process, ask myself if I could have done anything differently with the knowledge I had at the time, determine if there’s anything I should do to better prepare myself next time, and move on with a smile. It’s a much easier way to live.
Photo is the cool Chinese New Year display at the Bellagio conservatory in Las Vegas. I love checking out their seasonal flowers.
Please send more post suggestions! I’ll be writing a year of posts in about a month.