Superior Investing (AND LIFE) Is All About Making Mistakes

geeseI talk about making mistakes a lot here.

Probably because I’ve made a lot of mistakes throughout the course of my life and my career.  A big part of growing and learning is about falling down, getting back up and pushing forward only so you can fall down and get back up again.

It’s important that you try not to fall down, but it’s equally important that you understand why you fell down so you can get back up and push forward understanding your past mistakes.

This is how we evolve and improve. So I was glad to see the latest from Howard Marks covering this topic more thoroughly than I will here:

“Mistakes are a frequent topic of discussion in our world.  It’s not unusual to see investors criticized for errors that resulted in poor performance.  But rarely do we hear about mistakes as an indispensible component of the investment process.  I’m writing now to point out that mistakes are all that superior investing is about.  In short, in order for one side of a transaction to turn out to be a major success, the other side has to have been a big mistake.

There’s an old saying in poker that there’s a “fish” (a sucker, or an unskilled player who’s likely to lose) in every game, and if you’ve played for an hour without having figured out who the fish is, then it’s you.  Likewise, in every investment transaction you’re part of, it’s likely that someone’s making a mistake.  The key to success is to not have it be you.

Usually a buyer buys an asset because he thinks it’s worth more than the price he’s paying.  But the seller sells the asset because he thinks the price he’s getting exceeds its value.  It’s pretty safe to say one of them has to be wrong.  Strictly speaking, that doesn’t have to be true, thanks to differences in things like tax status, timeframe and investors’ circumstances.  But in general, win/win transactions are much less common than win/lose transactions.  When the dust has settled after most trades, the buyer and seller are unlikely to be equally happy.

I consider it highly desirable to focus on the topic of investing mistakes.  First, it serves as a reminder that the potential for error is ever-present, and thus of the importance of mistake minimization as a key goal.  Second, if one side of every transaction is wrong, we have to ponder why we should think it’s not us.  Third, then, it causes us to consider how to minimize the probability of being the one making the mistake.”

In the world of investing, it’s unusual to find someone who won’t agree with the notion that the best lessons are generally the costliest ones.   The same could be said of life.  We are in a constant process of learning and a big part of learning is understanding why we are often wrong.  

When you understand how you can be wrong you then understand how to avoid past mistakes thereby improving your future odds of being right.  So it’s important that a mistake not become a regret.  A mistake must always turn into a lesson.  That’s called progress and in this business we’re ALL always making mistakes.  

The people who make progress are the ones who learn from their mistakes (as opposed to claiming they never make mistakes).

I often embrace being wrong even though it’s something I try to avoid.  The thing is, it’s guaranteed to happen in this business.  Investors are in the business of learning to be wrong so they can learn to be right.  

No one enters this world or this business knowing everything.  And it’s the people who evolve and learn from their mistakes more quickly than others who stick around in this business.

I’d read the whole Marks letter here.  It’s very good.

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »

Source: http://feedproxy.google.com/~r/businessinsider/~3/fxDvEG9hkN0/superior-investing-and-life-is-all-about-making-mistakes-2012-6

freedom debt relief scam get debt help government debt consolidation loans grants to pay off debt

Apple Locks In Liquidmetal For Two More Years

Imagine iPhone 5 looking as though it is made of a liquid metal, and feels like a liquid to the touch. Imagine a case more than twice as strong as titanium. Imagine no scratches or smudges. If there is a confirmation of Apple's use of Liquidmetal, you should buy Apple.

Source: http://www.forbes.com/sites/greatspeculations/2012/06/22/apple-locks-in-liquidmetal-for-two-more-years/

debt advice uk debt advisor debt arbitration debt clearance

The Benefits Of An RSA Course

The RSA program is a distinctive training on consumption of alcohol. The term RSA means responsible service of alcohol. This training is mandatory in some states for any individual who wishes to work in an area that is selling alcohol and beverages. These fields comprise of bus individual, restaurant, bottle shop attendant, cocktail bar attendant, [...]

Source: http://www.legaldebthelponline.com/2012/06/21/the-benefits-of-an-rsa-course/

debt consolidation canada debt consolidation florida debt consolidation leads debt consolidation lenders

Michigan Lawmakers Think People Should Pay $1,000 For Disrupting Church

church-aisle-way-long

The Michigan state Senate has passed a bill that would double the fine for disrupting a religious service to $1,000.

According to ClickOnDetroit.com, the bill came in reaction to a protest by the self-described homosexual anarchist group, "Bash Back" in 2008 at a church in West Lansing, Michigan.

During this incident, 30 members of Bash Back allegedly burst into Mount Hope church during a Sunday service. The group allegedly set off fire alarms, vandalized the church and shouted obscenities at church members they confronted, reports Catholic Online. They also reported no arrests were made during this incident.

Under the new law, anyone who purposefully disrupts a legal religious gathering will face up to 93 days in jail and a $1,000 fine. A repeat offender can see the fine grow to $5,000. Previously the law only called for a maximum of a $500 fine, according to Christopher Behnan at the Livingston Daily.

"Nobody should fear disruption of their worship services by political opponents, and this legislation should shield them from such chaos," Rep. Deb Shaughnessy said in a statement.

Every state handles this offense differently but some, like Virginia and New York, treat it as a serious misdemeanor. The penalty in Virginia is even more severe than Michigan with a maximum fine of $2,500.

DON'T MISS: This German woman has been living without money for 16 years >

Please follow Your Money on Twitter and Facebook.

Join the conversation about this story »

Source: http://feedproxy.google.com/~r/businessinsider/~3/6numnZTq8_Q/michigans-senates-passes-1000-fine-church-disruptions-2012-6

debt reduction software debt reduction strategies debt relief grants debt relief of america

There's A Reason Americans Pass By Homeless People In The Street Without A Second Glance

poorSome people's willingness to accept income inequality has everything to do with their perception of choice, Pacific Standard's Tom Jacobs reports.

Psychologists Krishna Savani of Columbia Business School and Aneeta Rattan of Stanford University expand on the topic in a study published by Psychological Science:

"The concept of choice makes people less disturbed by facts about existing wealth inequality in the United States, more likely to underestimate the role of societal factors in individuals’ successes, less likely to support the redistribution of educational resources, and less likely to support raising taxes on the rich—even if doing so would help resolve a budget deficit crisis.

Thinking in terms of choice, we argue, activates the belief that life outcomes stem from personal agency, not societal factors, and thereby leads people to justify wealth inequality." 

In layman's terms, we make peace with the idea that some people are destitute and others are well-off because of personal choices, rather than any possible chinks in our economical and societal armor. 

Here's how Rattan and Savani came to that conclusion: 

They used six different experiments, giving half the participants in each experiment a different task. One half were asked to list out a series of choices they'd made over the last 24 hours. The other half were just asked to do something that involved no choice-making.

Afterward, researchers ran through 10 different scenarios illustrating income disparity (i.e.: "Between 1990 and 2010, the average worker’s salary has risen less than 5 percent, while the average CEO’s salary has risen by 500 percent.") to gauge their reaction.

What they found was that people who'd been forced to mull over choices were far less disturbed by news of income inequality and less-inclined to support programs that benefited the poor. For example, they might back a student aid program but not one targeting low-income students only.

"These findings indicate that the culturally valued concept of choice contributes to the maintenance of wealth inequality," the researches conclude. 

It's an interesting point at a time when the gap between America's rich and poor grows ever wider. 

Between 2005 and 2009, the richest 10% in the country saw their wealth expand from 49% to 56%, according to a survey released last year by Pew Charitable Trusts.  Of more than 2,000 adults surveyed, the majority said they felt wealthy citizens simply knew the right people or were born into money. 

As a result, two-thirds of consumers said there are "very strong" or "strong" conflicts between the rich and the poor–up 19% from the same report just two years ago. 

DON'T MISS: This German woman has been living without money for 16 years >

Please follow Your Money on Twitter and Facebook.

Join the conversation about this story »

Source: http://feedproxy.google.com/~r/businessinsider/~3/8uLWT5qOG4w/how-americans-justify-income-inequality-2012-6

debt relief of america debt relief scams debt repayment calculator debt rescue

Bankruptcy-Chapter 13 Or Chapter 7 Bankruptcy?

Should you be investing a sizable one time, place the money in a funds marketplace consideration in the first place and phase it into before-chosen investments a duration of time. Many of the important with equity marketplaces: won’t make investments all of your funds when cost is higher and lose out later on, once they [...]

Source: http://www.legaldebthelponline.com/2012/06/22/bankruptcy-chapter-13-or-chapter-7-bankruptcy/

debt settlement usa debt shield debt stoppers debt to income ratio calculator

Credit Card Lawsuit Facts: Conveying The Plaintiff

In case you are going through a credit score card lawsuit for that initially time, probability are, you’ve little or no to go on with regards to defending oneself. During this report, we are going to go over primary credit score card lawsuit information and facts and getting to know the plaintiff. Now, in the [...]

Source: http://www.legaldebthelponline.com/2012/06/21/credit-card-lawsuit-facts-conveying-the-plaintiff/

langhorne debt solutions medical bankruptcy mercers debt michigan debt consolidation