Mistakes as Assets
When I was in college, I always scheduled the dreaded eight o'clock classes. I’m aware this isn’t normal, but I did it for seemingly good reasons. Aside from being in the Air Force ROTC program and having 6:30 am workouts, I knew if I started classes early enough, I could be back in my dorm room in time to day trade until the markets closed.
At the time, trading seemed like a great way to make some extra money. I was buying and selling penny stocks of businesses I knew nothing about except the ticker symbol and price. Now, I can look back at my days as a fresh-faced know-it-all and laugh. I made mistakes. Over and over again, I made mistakes. Fortunately, I never got crushed. Now, those early mistakes are assets, not liabilities.
I used to look at mistakes fearfully. I didn’t want to mess up, and if I did, I sure as hell didn’t want anyone to know about it. I sought perfection, or at least to seem perfect, despite being deeply flawed just like everyone else.
Those who know me might be surprised to learn that I used to hate speaking in public. It scared me to think I might say something stupid in front of a large group of people. Now I relish opportunities for my loud voice to be heard. What changed? I spoke in public enough times to realize that no one cares when you make a mistake. It humanizes you, helps you connect with the audience, and lightens the mood. A slip of the tongue or misstep on stage might be a bit embarrassing, but that’s it. Once you learn to stop beating yourself up over the slightest blunder, your mind opens to trying new things.
As Aristotle pointed out, “For what one has to learn to do, we learn by doing.” Public speaking mistakes helped me become a better public speaker. Horrendous investing mistakes helped me become a better investor. The fact is, errors are unavoidable, so we must welcome them as opportunities to get better.
“A man who has committed a mistake and doesn’t correct it, is committing another mistake.” — Confucius.
There are infinite mistakes to make, therefore, endless learning opportunities. I don’t recommend attempting to make every mistake imaginable, though. Instead, focus on learning from mistakes that happen and try to avoid repeating them.
Here are some ways to reduce the odds of repeating mistakes and minimize the impact of errors made:
Admit— it sounds simple enough but admitting a mistake can be challenging. There are sensible reasons we don’t want to admit when we’re wrong. Admission can lead to ridicule and criticism, which feels like punishment. Additionally, we fear our mistakes can lead to a loss of authority, even if unfairly. As an investment manager, I’m going to make mistakes. By owning up to these mistakes, some onlookers may conclude that I’m not good at my job, fair or not. But to learn, we must own our mistakes.
Analyze— while many never achieve step one, admission isn’t enough. An honest evaluation is needed to determine how and why the error happened in the first place. A proper assessment goes beyond the obvious. An actual review considers the entire sequence of decisions that led to the outcome. Often the root cause is several layers removed from the result, making it a challenge to identify.
Improve — this step is all about getting better. Improvement is a process. One must make changes to procedures, thinking, behaviors, and habits that lead to poor outcomes. Was the mistake a failure of analysis? Perhaps We didn’t adequately weigh the likely outcomes. Was it a lack of expertise? Sometimes we rush into endeavors without the proper skills or training. Whatever the root cause, make the adjustments necessary to reduce the likelihood of a similar mistake occurring again.
One of the ironies in life is that we feel it’s too late to benefit from mistakes by the time we become comfortable making them. The classic adage, “youth is wasted on the young,” strikes again.
Mistakes made earlier are lessons learned sooner. But as Einstein said, “the only mistake in life is the lesson not learned.” A mistake today is worth more than a mistake tomorrow. So no matter what stage in life you’re in, go forth. When you inevitably make mistakes, learn and continue on. You’ll likely look back fondly on those failures as enablers of improvement.
