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Before you read this letter, I want you to think of one of the most uncomfortable but constant companions that every investor lives regret. It is the persistent voice from the inside that you remind you of the stock that you sold too early, the chance you missed or the error you refused to correct. I have lived with it for years. This letter is my attempt to speak directly with that old, unwanted friend. I feel that parts of it may also be known.
Dear regret,
You and I have known each other for a while. I have never invited you to my life, or as an investor, but somehow you always succeeded in appearing like the cat of that neighbor walking into the house, makes himself comfortable on the couch and looks at me as if I should be grateful for his company.
I remember our first serious encounter. I had sold a stock in three years for a good profit of 400%, I felt disciplined and quite satisfied with myself. I had followed the “be rational” rule book: don’t get greedy, book your profit. But then the stock doubled and then doubled again, and again. And there you were whispering next to me in that furious voice, “Do you see? You thought you were smart.” That was the day you moved, and you have been renting space in my head since then, without paying anything as a rent.
Over the years you have showed up in all kinds of moments. You were there when I hesitated to buy a great company because the market “looked expensive” and then saw it rise for years. You were very happy when I stubbornly held on to a bad thing and said to myself: “I will now regret it that I will be back now when it bounces back tomorrow.” You danced practically with joy when I ignored an idea that I had investigated well, just to see it being a market while I looked from the sidelines.
I now know that you are not only a transient emotion, but a fully -fledged behavioral advantage. In fact, experts also have a name for it: regret Aversion -Bias. It is a tendency to avoid decisions because we are afraid of the pain of future regret.
So, under the robe of this bias, you let me a second robber who sell a share because I can already imagine the pain when it meets after I sell. You stop me from buying a great company, because I propose the shame if it falls immediately after I do that. Sometimes you paralyze me not to do anything at all. The irony is of course that I often invite you when trying to avoid.
You taught me that regret comes in two flavors. First of all, regret is action, as when I bought a hot “next big thing” and saw it fall 50%. You can show up quickly and say: “Could it not help, right?”
The second, and much worse, is regret in inactivity, when I do nothing, and the stock that I have spent months research will be a 10-bagger without me. That is when you are on your most unbearable.
If I am honest, you have cost me both money and peace of mind. But despite your annoyances you have taught me some valuable lessons.
First of all you humiliated me. Every “should have bought” and “shouldn’t have been selling” reminds me that investing is not going to know everything, but about survival long enough to be right enough.
You have also forced me to appreciate the process about the outcome, because chasing perfect results is the fastest way to let you dominate my decisions. I now keep an investment diary where I write down my reasoning for every purchase or sale. If you pop up later, I will visit those notes again and remind myself “I made the best decision I could do with the information I had.” That makes your voice a little softer.
I also learned to recognize you in the form of regret -before it catches me. When I feel frozen, I ask myself “Do I avoid this decision because it is wrong, or just because I am scared, will I regret it?” That one question saved me from a few painful mistakes.
I no longer expect me to have to avoid you completely. Even the best investors live with you. Warren Buffett has his regret about missing Amazon and Google. Charlie Munger has his list of “what could have been” investments. If they can live with you, I think I can do that too.
The truth is that you are part of the entrance fee to the investment game. You will always visit. There will always be a stock that I have sold too quickly or a winner that I missed. The market will always create scenarios in which someone earns more money somewhere than me. Accept that it has been liberating. I teach you to greet you with less panic and more curiosity. If you appear now, I ask myself: “Was my process sound? Would I make the same choice with the same information?” If so, I make a cup of tea for you, let me scold me a bit and then show the door.
I know I will continue to make mistakes. I will sell too early and buy too late. I will keep some losers and miss some winners. But I hope that our future visits will be less dramatic.
Maybe you can switch from a tormenting spirit to coach and offer lessons without paralyzing me. And perhaps I can use your life more gracefully, knowing that the real victory in investing is in survival with humility and a process that I can trust, not in avoiding regret completely.
So here is for you, dear regret. Thank you for the pain, scars and the lessons. I try to live with you in peace, but I would like to make fewer memories with you in the coming years.
Yours in uncomfortable friendship,
Fish hall
Two books. One goal. A better life.
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#regret #Safal #NiveShak